Suppose Super Clean sells air filters for $3

Subject:AccountingPrice: Bought3

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Suppose Super Clean sells air filters for $3.40 each. Assume that a mail-order company has offered Super Clean $31,450 for 17,000 air filters, or $1.85 per filter. The manufacturing cost per unit is $2.05 under absorption costing. Suppose Super Clean's variable manufacturing cost is $1.25 per air filter. In addition, Super Clean would have to buy a special stamping machine that costs $5,000 to mark the customer's logo on the special-order air filters. The machine would be scrapped when the special order is complete. This sale will • use manufacturing capacity that would otherwise be idle. . not change fixed costs. • not require any variable nonmanufacturing expenses (because no extra marketing costs are incurred with this special order). • not affect regular sales. Would you recommend that Super Clean accept the special order under these conditions? Show your analysis. Complete the following incremental analysis to help you make your recommendation. (Use parentheses or a minus sign to enter a decrease in operating income.) Super Clean Incremental Analysis of Special Sales Order Expected increase in revenues Expected increase in expenses: Total expected increase in expenses Expected increase (decrease) in operating income