Farrow Co. expects to sell 400,000 units of its product in the next period with the following results.

Sales (400,000 units)	$	6,000,000
Costs and expenses
Direct materials		800,000
Direct labor		1,600,000
Overhead		400,000
Selling expenses		600,000
Administrative expenses		1,028,000
Total costs and expenses		4,428,000
Net income	$	1,572,000

The company has an opportunity to sell 40,000 additional units at $12 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 $172,000. Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $12 per unit. Should the company accept or reject the offer?

Farrow Co. expects to sell 400,000 units of its product in the next period with the following results. $6,000,000 Sales (400,000 units) Costs and expenses Direct materials Direct labor Overhead Selling expenses Administrative expenses Total costs and expenses Net income 800,000 1,600,000 400,000 600,000 1,028,000 4,428,000 $1,572,000 The company has an opportunity to sell 40,000 additional units at $12 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 $172,000. Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $12 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 $12 per unit. Additional Combined Normal Volume The company has an opportunity to sell 40,000 additional units at $12 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 $172,000. Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $12 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 $12 per unit. Normal Volume Additional Volume Combined Total 6,000,000 Sales $ 6,000,000 Costs and expenses: Direct materials 800,000 800,000 Direct labor 1,600,000 Overhead 400,000 600,000 1,600,000 400,000 600,000 1,028,000 Selling expenses Administrative expenses 1,028,000 4,428,000 1,572,000 $ Total costs and expenses Incremental income (loss) from new business 0 4,428,000 1,572,000 $ 0 Net Income Accept or Reject> The company has an opportunity to sell 40,000 additional units at $12 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 $172,000. Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $12 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 Should the company accept or reject the offer? Should the company accept or reject the offer?