Exercise 23-3 Accept new business or not LO A1 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 $132 per unit. Management is approached by a new customer who wants to purchase 22,000 units of the product for $82.80 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 $7.00 per unit shipping expense in addition to the regular variable selling and administrative expenses. Costs at Per Unit 88,000 Units 1,100,000 1,320,000 ,320,000 1,540,000 ,496,000 1,320,000 8,096,000 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Pixed selling and administrative expenses Totals $12.50 15.00 15.00 17.50 17.00 15.00 $92.00 Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $82.80 per unit. Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $82.80 per unit. Normal Volume Additional $ 11,616,000 $ Volume Total 1,822 S 11,617,822 Sales Costs and expenses: 275,000 330,000 330,000 385,000 374,000 330,000 Direct materials Direct labor Variable overhead Fixed overhead Variable selling and admin. exp Fixed selling and admin. exp 275,000 330,000 330,000 385,000 374,000 330,000 2,024,000 9,592,000 1,822 $ 9,593,822 2,024,000 0 Total costs and expenses Net income (loss)