Answer Happy

The Everest Company provides landscaping services to corporations and businesses. All its landscaping work requires Everest to use landscaping equipment. Its landscaping equipment has the capacity to do 13,500 hours of landscaping work. It is currently utilizing 12.000 hours of equipment time. Everest charges $100 per hour for landscaping work. Cost information for the current activity level is as follows: (Click the icon to view the cost information) Read the requirement Begin by determining the change in operating income if Everest accepts the special order (if a box is not used in the table, leave the box empty, do not select a label or enfer a zero. Use parentheses or a minus sign to enter a decrease in operating income.) Revenues Less: Variable landscaping costs Increase (decrease) in operating income by accepting the one-time special order
Everest has just received a one-time only special order for landscaping work from Lovell Corporation at $66 per hour that would require 1,500 hours of equipment time. Should Everest accept the offer even though revenue per hour is less than Everest's landscaping cost of $73 per hour [($780,000 + $96,000) / 12,000 hours)]. No marketing costs will be necessary for the one-time only special order. Print Done