Question
Bridgeport Company produces golf discs, which it normally sells to retailers for $12 each. The cost of manufacturing 23,600 golf discs is: Materials $9,440 Labour
Bridgeport Company produces golf discs, which it normally sells to retailers for $12 each. The cost of manufacturing 23,600 golf discs is:
Materials | $9,440 | ||
Labour | 29,500 | ||
Variable overhead | 20,532 | ||
Fixed overhead | 36,500 | ||
Total | $95,972 |
Bridgeport also incurs 5% sales commission ($0.60) on each disc sold. Richetti Corporation offers Bridgeport $9.60 per disc for 5,900 discs. Richetti would sell the discs under its own brand name in foreign markets not yet served by Bridgeport. If Bridgeport accepts the offer, it will incur a one-time fixed cost of $6,700 due to the rental of an imprinting machine. No sales commission will result from the special order.
1. Prepare an incremental analysis for the special order. (Round per unit calculations to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g. 5,275.)
Incremental Contribution Margin ($__________) - Incremental Cost (Fixed Cost $_________) = Incremental Income ($_________)
2. Bridgeport should accept the special order because it will increase their net income by $_________
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