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FURY produces and sells skateboards. Its contribution margin income statement follows. Contribution Margin Income Statement For Year Ended December 31 Sales (80,000 units) Annual
FURY produces and sells skateboards. Its contribution margin income statement follows. Contribution Margin Income Statement For Year Ended December 31 Sales (80,000 units) Annual Total Per Unit $ 50.00 $ 4,000,000 Variable costs Direct materials Direct labor Variable overhead Contribution margin Fixed costs Fixed overhead Fixed general and administrative Incone 20.00 1,600,000 8.00 640,000 12.00 960,000 10.00 800,000 3.00 240,000 2.00 $5.00 160,000 $ 400,000 A potential customer offers to buy 10,000 units for $42.00 each. These sales would not affect the company's sales through its normal channels. Details of the special offer follow. Variable costs per unit would not change. Accepting the offer would require incremental fixed overhead costs of $10,000. Accepting the offer would require incremental fixed general and administrative costs of $15,000. Required: 1. Compute income or loss from the special offer. 2. Should the company accept or reject the special offer? Complete this question by entering your answers in the tabs below.
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