FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Chapter 8 Question 2

Please help me answer the part in red. I know it is NOT 572,000 nor is it 457,600. 

 

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Flint Company is a leading manufacturer of sunglasses. One of Flint's products protects the eyes from ultraviolet rays. An upscale
sporting goods store has contacted Flint about purchasing 28,600 pairs of these sunglasses. Flint's unit manufacturing cost, based
on a full capacity of 241,000 units, is as follows:
Direct materials
$6
Direct labor
4
Manufacturing overhead (75% fixed)
24
Total manufacturing costs
$34
Flint also incurs selling and administrative expenses of $74,100 plus $2 per pair for sales commissions. The company has plenty of
excess manufacturing capacity to use in manufacturing the sunglasses. Flint's normal price for these sunglasses is $40 per pair. The
sporting goods store has offered to pay $34 per pair. Since the special order was initiated by the sporting goods store, no sales
commission will be paid.
What would be the effect on Flint's income if the special order were accepted?
Flint's income will increase
by $
457600
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Transcribed Image Text:Flint Company is a leading manufacturer of sunglasses. One of Flint's products protects the eyes from ultraviolet rays. An upscale sporting goods store has contacted Flint about purchasing 28,600 pairs of these sunglasses. Flint's unit manufacturing cost, based on a full capacity of 241,000 units, is as follows: Direct materials $6 Direct labor 4 Manufacturing overhead (75% fixed) 24 Total manufacturing costs $34 Flint also incurs selling and administrative expenses of $74,100 plus $2 per pair for sales commissions. The company has plenty of excess manufacturing capacity to use in manufacturing the sunglasses. Flint's normal price for these sunglasses is $40 per pair. The sporting goods store has offered to pay $34 per pair. Since the special order was initiated by the sporting goods store, no sales commission will be paid. What would be the effect on Flint's income if the special order were accepted? Flint's income will increase by $ 457600
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