Incremental Analysis of Special Sales Order Decision Ludolph

Last updated: 11/12/2023

Incremental Analysis of Special Sales Order Decision Ludolph Industries has an annual plant capacity of 74 000 units current production is 59 000 units per year At the current production volume the variable cost per unit is 31 00 and the fixed cost per unit is 4 40 The normal selling price of Ludolph s product is 46 00 per unit Ludolph has been asked by Bramwall Company to fill a special order for 11 000 units of the product at a special sales price of 23 00 per unit Bramwall is located in a foreign country where Ludolph does not currently operate Bramwall will market the units in its country under its own brand name so the special order is not expected to have any effect on Ludolph s regular sales Read the requirements Revenue from special order Less expenses associated with the order Less Variable manufacturing cost Contribution margin Less Additional fixed expenses associated with the order Increase decrease in operating income from the special order Incremental Analysis of Special Sales Order Decision Total Order 11 000 units 253 000 Revenue from special order Less expenses associated with the order Less Variable manufacturing cost Contribution margin Less Additional fixed expenses associated with the order Increase decrease in operating income from the special order 0 Total Order 11 000 units possible CO Ludolph should accept the special sales order because it will increase operating income Requirement 2 How would your analysis change if the special order sales price were to be 38 00 per unit and Ludolph would have to pay an attorney a fee of 17 000 to make sure it is complying with export laws and regulations relating to the special order Enter a 0 for any zero balances Use parentheses or a minus sign to indicate a decrease in contribution margin and or operating income from the special order test