Exercise 23-14 Accept new business or not LO P7 Goshford Company produces a single product and has capacity to produce 110,000 units per month. Costs to produce its current sales of 88,000 units follow. The regular selling price of the product is $106 per unit. Management is approached by a new customer who wants to purchase 22,000 units of the product for $8100 per unit. If the order is accepted, there will be no additional fixed manufacturing overhead and no additional fixed selling and administrative expenses. The customer is not in the company's regular selling territory, so there will be a $7.40 per unit shipping expense in addition to the regular variable selling and administrative expenses. 27 Direct materials Direct labor Variable manufacturing overhead Pixed manufacturing overhead Variable selling and administrative expenses Fixed selling and adninistrative expenses Totals Costaat Per Unit 88,000 Units $12.50 $1,100,000 15.00 1,320,000 14.00 1,232,000 17.50 1,540,000 15.00 1,320,000 16.00 1.400.000 $90.00 $7.920,000 Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $81.00 per unit Determine whether management should accept or reject the new business ces 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 $81.00 per unit. Normal Volume Additional Volume Combined Total Costs and expenses Total costs and expenses Not income (los) Net Accept or Raject> Goshford Company produces a single product and has capacity to produce 110,000 units per month. Costs to produce its current sales of 88,000 units follow. The regular selling price of the product is $106 per unit. Management is approached by a new customer who wants to purchase 22,000 units of the product for $81.00 per unit. If the order is accepted, there will be no additional fixed manufacturing overhead and no additional fixed selling and administrative expenses. The customer is not in the company's regular selling territory, so there will be a $7.40 per unit shipping expense in addition to the regular variable selling and administrative expenses. Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Pixed selling and administrative expenses Totals Der Unit $12.50 15.00 14.00 17.50 15.00 16.00 $90.00 Costs at 88,000 Units $1,100,000 1,320,000 1,232,000 1,540,000 1,320,000 1.400.000 $7.920,000 Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $81.00 per unit. Determine whether management should accept or reject the new business. Complete this question by entering your answers in the tabs below. Acceptor Net Income Reject Determine whether management should accept or reject the new business. Determine whether management should accept or reject the new bus now!
