Homework answers / question archive / Maria's Food Service provides meals that nonprofit organizations distribute to handicapped and elderly people

Maria's Food Service provides meals that nonprofit organizations distribute to handicapped and elderly people

Finance

Share With

Maria's Food Service provides meals that nonprofit organizations distribute to handicapped and elderly people. The following is her forecasted income statement for April. when she expects to produce and sell 3.700 meals: 
Amount Per Unit Sales revenue $24,790 $6.70 Costs cf meals produced 17,945 4.85 Gross profit $ 8,845 $1.85 Administrative costs 2,960 0.80 Operating profit $ 3,885 $1.05 
Fixed costs included In this income statement are $5.809 for meal production and $740 for administrative costs. Maria has received a special request from an organization sponsoring a picnic to raise funds for the Special Olympics. This organization is willing to pay $3.85 per meal for 300 meals on April 10. Maria has sufficient idle capacity to fill this special order. These meals will incur all of the variable costs of meals produced, but variable administrative costs and total fixed costs will not be affected. 

Required:

a. What impact would accepting this special order have on operating profit? (Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.)

b. From an operating profit perspective for April, should Maria accept the order?

multiple choice

• Yes
• No