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 $128 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 $6.40 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 Fixed selling and administrative expenses Totals Per Unit $12.50 15.00 13.00 17.50 17.00 15.00 $90.00 Costs at 86,000 units $1,100,000 1,320,000 1,144,000 1,540,000 1,496,000 1,320,000 $ 7,920,000 Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $8100 per unit. Determine whether management should accept or reject the new business mnate this question by entering your answers in the tabs below. 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 a $81.00 per unit. Normal Volume Additional Volume Combined Total $ 0 Costs and expenses: 0 0 0 0 0 0 0 0 0 0 0 0 0 Total costs and expenses Net income (loss) Chec Gelb Company currently manufactures 52,500 units per year of a key component for its manufacturing process. Variable costs are $735 per unit, fixed costs related to making this component are $89.000 per year, and allocated fixed costs are $63,500 per year. The allocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying this component from a supplier for $370 per unit Calculate the total incremental cost of making 52,500 units and buying 52,500 units Should it continue to manufacture the component, or should it buy this component from the outside supplier? Complete this question by entering your answers in the tabs below. Costs to Make Costs to Buy Outside Supplier Calculate the total incremental cost of making 52,500 units. (Round variable cost per unit" answers to 2 decimal places.) Incremental Costs to Make Relevant Amount per Unit Relevant Fixed Costs Total Relevant Costs Total incremental cost to make $ $7.35 per unit, fixed costs related to making this component are $89.000 per year, and allocated fixed allocated fixed costs are unavoidable whether the company makes or buys this component. The com component from a supplier for $3.70 per unit. Calculate the total incremental cost of making 52,500 units and buying 52,500 units. Should it contin component, or should it buy this component from the outside supplier? Complete this question by entering your answers in the tabs below. Costs to Make Costs to Buy Outside Supplier Calculate the total incremental cost of buying 52,500 units. (Round "purchase price per unit" answers to Incremental Costs to Buy Relevant Amount per Unit Relevant Fixed Costs Total Relevant Costs Total incremental cost to buy ( Costs to Make Outside Supplier >
