Question
Gruden Company produces golf discs which it normally sells to retailers for $7 each. The cost of manufacturing 19,600 golf discs is: Materials $
Gruden Company produces golf discs which it normally sells to retailers for $7 each. The cost of manufacturing 19,600 golf discs is: Materials $ 10,584 Labor 28,812 Variable overhead 19,796 Fixed overhead Total 39,984 $99,176 Gruden also incurs 8% sales commission ($0.56) on each disc sold. McGee Corporation offers Gruden $4.80 per disc for 5,600 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 $39.984 to $46,134 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 Revenues Materials Labor Variable overhead Fixed overhead Sales commissions Net income $ Net Income Increase (Decrease)
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