Goshford Company produces a single product and has capacity to produce 170,000 units per month. Costs to produce its current sales of 136,000 units follow. The regular selling price of the product is $114 per unit. Management is approached by a new customer who wants to purchase 34,000 units of the product for $79.20 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 $720 per unit shipping expense in addition to the regular variable selling and administrative expenses Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses Totals Per Unit $12.50 15.00 14.ee 17.50 14.00 15.ee $88.00 Costs at 136,000 Units $ 1,700,000 2,040,000 1,904,000 2,380,000 1,904,000 2,040,000 $11.968,000 Calculate the combined total net income if the company accepts the offer to sell (dditional units at the reduced price of $79.20 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 $79.20 per unit. Normal Volume Additional Volume Combined Total $ 0 Costs and expenses 0 Following is information on two alternative Investments being considered by Jolee Company. The company requires a 12% return from Its Investments. (PV of $1. FV of $1. PVA of $1, and FVA of $1 (Use appropriate factor(s) from the tables provided.) Project B $(160,968) Initial investment Expected net cash flows in Year 1 Year 2 Year 3 Year 4 Year 5 Project A $(184,325) 42,000 45,000 80,295 78,400 67,000 37,000 55,000 56,000 68,000 31,000 a. For each alternative project compute the net present value. b. For each alternative project compute the profitability Index. If the company can only select one project, which should it choose? Complete this question by entering your answers in the tabs below. Required A Required B For each alternative project compute the profitability Index. If the company can only select one project, which should it choose? Profitability Index Profitability Index Profitability Index Choose Numerator: Choose Denominator: 1 Project A Project B of the company can only select one project, which should it choose? 0
