Carney company manufactures cappuccino makers. for the first eight months of 2019, the company reported the following operating results while operating at 80% of plant capacity: sales (500,000 units) $90,000,000 cost of goods sold 54,000,000 gross profit 36,000,000 operating expenses 24,000,000 net income $12,000,000 an analysis of costs and expenses reveals that variable cost of goods sold is $95 per unit and variable operating expenses are $35 per unit. in september, carney company receives a special order for 40,000 machines at $135 each from a major coffee shop franchise. acceptance of the order would result in $10,000 of shipping costs but no increase in fixed expenses. collapse question part (a) prepare an incremental analysis for the special order.

Total  effect on income= $190,000

Explanation:

Giving the following information:

Sales (500,000 units) $90,000,000

Cost of goods sold 54,000,000

Gross profit 36,000,000

Operating expenses 24,000,000

Net income $12,000,000

An analysis of costs and expenses reveals that the variable cost of goods sold is $95 per unit and variable operating expenses are $35 per unit. In September, Carney Company receives a special order for 40,000 machines at $135 each from a major coffee shop franchise. Acceptance of the order would result in $10,000 of shipping costs but no increase in fixed expenses

Because it is a special offer and there is unused capacity, we will not have into account the fixed costs.

Total unitary cost= 95 + 35 + (10,000/40,000)= 130.25

Contribution margin= 135 - 130.25= 4.75

Total  effect on income= 4.75*40,000= $190,000