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Gruden also incurs 4% sales commission ($0.28) on each disc sold. McGee Corporation offers Gruden $4.80 per disc for 4,500 discs. McGee would sell the
Gruden also incurs 4% sales commission ($0.28) on each disc sold. McGee Corporation offers Gruden $4.80 per disc for 4,500 discs. McGee would sell the discs under its own brand name in foreign markets not yet served by Gruden. If Gruden accepts the offer, its fixed overhead will increase from $29,250 to $33,750 due to the purchase of a new imprinting machine. No sales commission will result from the special order. (a) Prepare an incremental analysis for the special order. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Reject Order Accept Order Net Income Increase (Decrease) Revenues 0 21,600 21,600 $ Materials 0 -2,025 -2,025 Labor 0 -6,300 -6,300 Variable overhead 0 -4,275 -4,275 x Fixed overhead -4,500 0 Sales commissions 0 0 4,500 Net income 0 4,500 4,500 (b) Should Gruden accept the special order? Gruden should accept the special order. Click if you would like to Show Work for this question: Open Show Work
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