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Goshford Company produces a single product and has capacity to produce 145,000 units per month. sales of 116,000 units follow. The regular selling price of
Goshford Company produces a single product and has capacity to produce 145,000 units per month. sales of 116,000 units follow. The regular selling price of the product is $132 per unit. Management is approached by a new custome who wants to purchase 29,000 units of the product for $80.10 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 $7.20 per unit shipping expense in addition to the regular variable selling and administrative produce its current expenses Costs at Per Unit $12.50 15.00 14.00 17.50 15.00 15.00 116,000 Units $ 1,450,000 1,740,000 1,624,e00 2,030,e00 1,740,000 1,740,000 $10,324,000 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses Totals $89.00 Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $80.10 per unit. Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $80.10 per unit Additional Volume Normal Volume Combined Total Sales $ 0 Costs and expenses Direct materials 0 Direct labor 0 Variable overhead 0 Fixed overhead 0 Variable selling and admin. exp 0 Fixed selling and admin. exp 0 0 Total costs and expenses 0 0 0 Net income (loss) 0S 0 0 Determine whether management should accept or reject the new business Accept Reject
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