ch23 q8

Exercise 23-13 Accept new business or not LO P7 Farrow Co. expects to sell 500,000 units of its product in the next period with the following results Sales (500,000 units) $7,500,000 Costs and expenses Direct materials Direct labor Overhead Selling expenses Administrative expenses Total costs and expenses 1,000,000 2,000,000 500,000 750,000 1,285,892 5,535,000 $1,965,000 Net income The company has an opportunity to sell 50,000 additional units at $13 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 additional units as they are for the regular units However, the additional volume would create the following incremental costs: (1) total overhead would increase by 16% and (2) administrative expenses would increase by $215,000, Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $13 per unit Should the company accept or reject the offer? Complete this question by entering your answers in the tabs below. Net Income Accept or Reject Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $13 per unit. Nommal Volume Additional Volume Combined Total 0 Costs and expenses 0 0 0 Complete this question by entering your answers in the tabs below. Net Income Accept or Reject Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $13 per unit. Normal Volume Additional Volume Combined Total 0 DAAR 0 0 Sales 0 Variable cost 0 Contribution margin 0 0 0 0 Total costs and expenses Incremental income (loss) from new business $ 0 S 0 0 Accept or Reject> Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced pr per unit. Normal Volume Additional Volume Combined Total 0 Costs and expenses 0 0 0 Administrative expenses Direct labor 0 Direct materials 0 0 0 0 $ 0 0 Overhead Accept or Reject> et income Reject Should the company accept or reject the offer? Should the company accept or reject the offer