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Goshford Company produces a single product and has capacity to produce 180,000 units per month. Costs to produce its current sales of 144,000 unilts follow.
Goshford Company produces a single product and has capacity to produce 180,000 units per month. Costs to produce its current sales of 144,000 unilts follow. The regular selling price of the product is $124 per unit. Management is approached by a new customer who wants to purchase 36,000 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 fxed selling and administrative expenses. The customer is not in the company's regular selling territory, so there will be a $5.20 per unit shipping expense in addition to the regular varieble selling and administrotive expenses 1,900,000 15.00 2,160,000 1,728,000 2, 520,000 2,304,000 160,000 8.00 12.672,000 12.50 Direet materiale Direct labor Variable manufactaring overhend Pixed manufacturing overhead Variable sellingand administrative expenses Pixed selling and adninistrative expenses Totals 12.00 17.50 16.00 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 Costs and expenses Direct materials Direct labor Variable overhead Fixed overhead Variable selling and admin. exp Fixed selling and admin exp Total costs and expenses 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. Determine whether management should accept or reject the new business
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