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Blossom Company produces golf discs which it normally sells to retailers for $7 each. The cost of manufacturing 19,900 golf discs is: Materials $ 10,945
Blossom Company produces golf discs which it normally sells to retailers for $7 each. The cost of manufacturing 19,900 golf discs is: Materials $ 10,945 29,651 Labor Variable overhead Fixed overhead 21,094 39,004 Total $100,694 Blossom also incurs 5% sales commission ($0.35) on each disc sold. McGee Corporation offers Blossom $4.80 per disc for 5,400 discs. McGee would sell the discs under its own brand name in foreign markets not yet served by Blossom. If Blossom accepts the offer, it will incur a one-time fixed cost of $6,370 due to the rental of an imprinting machine. No sales commission will result from the special order. Assume there is sufficient capacity to accommodate the special order. Blossom Company produces golf discs which it normally sells to retailers for $7 each. The cost of manufacturing 19,900 golf discs is: Materials $ 10,945 29,651 Labor Variable overhead Fixed overhead 21,094 39,004 Total $100,694 Blossom also incurs 5% sales commission ($0.35) on each disc sold. McGee Corporation offers Blossom $4.80 per disc for 5,400 discs. McGee would sell the discs under its own brand name in foreign markets not yet served by Blossom. If Blossom accepts the offer, it will incur a one-time fixed cost of $6,370 due to the rental of an imprinting machine. No sales commission will result from the special order. Assume there is sufficient capacity to accommodate the special order. (a) a Prepare an incremental analysis for the special order. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses eg. (45).) Reject Order Accept Order Net Income Increase (Decrease) Revenues $ Materials Labor Variable overhead Cost of equipment rental Net income $ $ (b) Should Blossom accept the special order? Blossom should the special order
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