Goshford Company produces a single product and has capacity to produce 120,000 units per month Costs to produce its current sales of 96,000 units follow The regular selling price of the product is $140 per unit Management is approached by a new customer who wants to purchase 24,000 units of the product for $74 70 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 companys regular selling territory, so there will be a $6 60 per unit shipping expense in addition to the regular variable selling and administrative expenses Per Unit Costs at 96,000 Units Direct materials $ 12 50 $ 1,200,000 Direct labor 15 00 1,440,000 Variable manufacturing overhead 11 00 1,056,000 Fixed manufacturing overhead 17 50 1,680,000 Variable selling and administrative expenses 14 00 1,344,000 Fixed selling and administrative expenses 13 00 1,248,000 Totals $ 83 00 $ 7,968,000 Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $74 70 per unit Determine whether management should accept or reject the new business Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $74 70 per unit Determine whether management should accept or reject the new business 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 $74 70 per unit Normal Volume Additional Volume Combined Total Costs and expenses Total costs and expenses Net income (loss) 0 0 0 0 $ $ $ Net Income Accept or Reject

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 17, 2024

Goshford Company produces a single product and has capacity to produce 120,000 units per month. Costs to produce its current sales of 96,000 units follow.

Goshford Company produces a single product and has capacity to produce 120,000 units per month. Costs to produce its current sales of 96,000 units follow. The regular selling price of the product is $140 per unit. Management is approached by a new customer who wants to purchase 24,000 units of the product for $74.70 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 companys regular selling territory, so there will be a $6.60 per unit shipping expense in addition to the regular variable selling and administrative expenses.

	Per Unit			Costs at 96,000 Units
Direct materials		$	12.50		$	1,200,000
Direct labor			15.00			1,440,000
Variable manufacturing overhead			11.00			1,056,000
Fixed manufacturing overhead			17.50			1,680,000
Variable selling and administrative expenses			14.00			1,344,000
Fixed selling and administrative expenses			13.00			1,248,000
Totals		$	83.00		$	7,968,000

image text in transcribed

Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $74.70 per unit. Determine whether management should accept or reject the new business. 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 $74.70 per unit. Normal Volume Additional Volume Combined Total Costs and expenses: Total costs and expenses Net income (loss) 0 0 0 0 $ $ $ Net Income Accept or Reject >