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.
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Sales revenue (350,000 units)
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$3,500,000
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Cost of goods sold
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2,600,000
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Gross profit
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900,000
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Operating expenses
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840,000
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Net income
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$ 60,000
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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.