Leno Company manufactures toasters. For the first 8 months of 2014, the company reported the following operating results while operating at 75% of plant capacity.
|
Sales revenue (350,000 units) |
$3,500,000 |
|
|
Cost of goods sold |
2,600,000 |
|
|
Gross profit |
900,000 |
|
|
Operating expenses |
840,000 |
|
|
Net income |
$ 60,000 |
Cost of goods sold was 70% variable and 30% fixed. Operating expenses were 75% variable and 25% fixed.
In September, Leno Company receives a special order for 15,000 toasters at $7.60 each from Centro Company of Ciudad Juarez. Acceptance of the order would result in $3,000 of shipping costs but no increase in fixed operating expenses.
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