Current Designs faces a number of important decisions that require incremental analysis.Recently, Mike Cichanowski, owner and CEO of Current Designs, received a phone call from the president of a brewing company. Hewas calling to inquire about the possibility of Current Designs producing "floating coolers" for a promotion his company was planning.These coolers resemble kayaks but are about one-third the size. They are used to float food and beverages while paddling down theriver on a weekend leisure trip. The company would be interested in purchasing 120 coolers for the upcoming summer. It is willing topay $255 per cooler. The brewing company would pick up the coolers upon completion of the order.Mike met with Diane Buswell, controller, to identify how much it would cost Current Designs to produce the coolers. After carefulanalysis, the following costs were identified.Direct materialsDirect laborVariable overheadCurrent Designs would be able to modify an existing mold to produce the coolers. The cost of these modifications would beapproximately $3,700. Current Designs has sufficient capacity to produce the special order without impacting current operations.(a)Prepare an incremental analysis to determine whether Current Designs should accept this special order to produce the coolers. (Enterdecrease in net income then enter with a negative sign preceding the number or parenthesis, e.g.-15,000 or (15,000).)RevenuesCosts$83 /unit$57 /unit$23 /unitNet Income$Current Designs shouldReject Order$Accept Order$the order based on the incremental analysis.Net IncomeIncrease (Decrease)

Businesses can assess the financial viability of accepting a one-time or special order from a client…

Answered: Recently, Mike Cichanowski, owner and…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Now that operations for outdoor clinics and TEAM events are running smoothly, Suzie thinks of another area for business expansion. She notices that a few clinic participants wear multiuse (MU) watches. Beyond the normal timekeeping features of most watches, MU watches are able to report temperature, altitude, and barometric pressure. MU watches are waterproof, so moisture from kayaking, rain, fishing, or even diving up to 100 feet won’t damage them. Suzie decides to have MU watches available for sale at the start of each clinic. The following transactions relate to purchases and sales of watches during the second half of 2022. All watches are sold for $500 each. Jul. 17 Purchased 50 watches for $7,500 ($150 per watch) on account. Jul. 31 Sold 40 watches for $20,000 cash. Aug. 12 Purchased 40 watches for $6,400 ($160 per watch) cash. Aug. 22 Sold 30 watches for $15,000 on account. Sep. 19 Paid for watches purchased on July 17. Sep. 27 Receive cash…

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