Farrow Co. expects to sell 150,000 units of its product in the next period with the following results.

The company has an opportunity to sell 15,000 additional units at $12 per unit. The additional sales would not affect its current expected sales. Direct materials and labor costs per unit would be the same for the ad¬ ditional units as they are for the regular units. However, the additional volume would create the following incremental costs: (1) total overhead would increase by 15% and (2) administrative expenses would in¬ crease by $64,500. Prepare an analysis to determine whether the company should accept or reject the offer to sell additional units at the reduced price of $ 12 per unit

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Sales (150,000 units) Costs and expenses $2,250,000 Direct materials... Direct labor.... Overhead...... Selling expenses. Administrative expenses Total costs and expenses... Net income 300,000 600,000 150,000 225,000 385,500 1,660,500 $ 589,500