Question
Gruden Company produces golf discs which it normally sells to retailers for $7 each. The cost of manufacturing 16,700 golf discs is: Materials $ 8,350
Gruden Company produces golf discs which it normally sells to retailers for $7 each. The cost of manufacturing 16,700 golf discs is: Materials $ 8,350 Labor 24,883 Variable overhead 17,702 Fixed overhead 32,899 Total $83,834 Gruden also incurs 6% sales commission ($0.42) on each disc sold. McGee Corporation offers Gruden $4.80 per disc for 5,100 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 $32,899 to $38,779 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 $ $ $ Materials Labor Variable overhead Fixed overhead Sales commissions Net income $ $ $ (b) Should Gruden accept the special order? Gruden should the special order .
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started