Quick Lift manufactures motorcycle power lift ramps for loading motorcycles into the bed of a...
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Accounting
Quick Lift manufactures motorcycle power lift ramps for loading motorcycles into the bed of a pickup truck in Erin. Quick Lift's contribution margin income statement for the most recent month contains the following data:
Sales in units
150
Sales revenue
$464,000
Variable expenses:
Manufacturing
$270,000
Marketing and administrative and shipping
67,500
Total variable expenses
$337,500
Contribution margin.
$ 126,500
Fixed expenses:
Manufacturing
54,000
Marketing and administrative
26,500
Total fixed expenses
80,500
Operating income.
$46,000
Southern Ontario Riders' Group (SORG) wants to buy 75 lifts from Quick Lift. Acceptance of the order will not increase Quick Lift's variable marketing and administrative expenses or any of its fixed expenses. The Quick Lift plant has enough unused capacity to manufacture the additional lifts. SORG has offered $2,100 per lift, which is below the normal sale price of $3,100.
Required:
1. Prepare an incremental analysis to determine whether Quick Lift should accept this special sales order.
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