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Farrow Company reports the following annual results. Per Unit $ 15.00 Annual Total $ 3,000,000 Contribution Margin Income Statement Sales (200,000 units) Variable costs Direct

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Farrow Company reports the following annual results. Per Unit $ 15.00 Annual Total $ 3,000,000 Contribution Margin Income Statement Sales (200,000 units) Variable costs Direct materials Direct labor Overhead Contribution margin Fixed costs Fixed overhead Fixed general and administrative Income 2.00 4.00 2.50 6.50 400,000 800,000 500,000 1,300,000 2.00 1.50 $ 3.00 400,000 300,000 $ 600,000 The company receives a special offer for 20,000 units at $12 per unit. The additional sales would not affect its normal sales Variable costs per unit would be the same for the special offer as they are for the normal units. The special offer would require Incremental fixed overhead of $80,000 and incrementol fixed general and administrative costs of $86,000. (a) Compute the income or loss for the special offer (b) Should the company accept or reject the special offer? Required A Required B Compute the income or loss for the special offer. (Round your "Per Unit" answers to 2 decimal places.) SPECIAL OFFER ANALYSIS Per Unit 12.00 Total 240,000 Sales 2.00 Variable costs Direct materials Direct labor Variable overhead 4.00 >> 40,000 80,000 50,000 2.50 Contribution margin 3.50 70,000 4.00 80,000 Fixed overhead Fixed general and administrative 3.00 X Income (loss) $ (3.50) $ (10,000)

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