Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Gruden Company produces golf discs, which it normally sells to retailers for $11 each. The cost of manufacturing 18,000 golf discs is: Materials Labour Variable

image text in transcribed
image text in transcribed
image text in transcribed
Gruden Company produces golf discs, which it normally sells to retailers for $11 each. The cost of manufacturing 18,000 golf discs is: Materials Labour Variable overhead Fixed overhead Total $10,080 28.080 19.440 45.000 $102.600 Gruden also incurs 10% sales commission (51.10) on each disc sold. McGee Corporation offers Gruden $6.60 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 $45,000 to $49,800 due to the purchase of a new imprinting machine. No sales commission will result from the special order. Gruden also incurs 10% sales commission ($1.10) on each disc sold. McGee Corporation offers Gruden $6.60 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 fred overhead will increase from $45,000 to $49,800 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. (Round per unit calculations to 2 decimal places, es 15.25 and final answers to decimal places, eg. 5,275.) $ Incremental contribution margin Incremental cost: Fixed cost Incremental income Should Gruden accept the special order? Why or why not? Gruden should the special order, as it will their net income by $ What assumption underlies the decision made in part (b)? The assumption underlying the decision is that current sales be affected if Gruden accepts the offer

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Essential Controller An Introduction To What Every Financial Manager Must Know

Authors: Steven M. Bragg

2nd Edition

1118169972, 9781118169971

More Books

Students also viewed these Accounting questions

Question

(0 How much cash did PepsiCo spend on capital expenditures in 2005?

Answered: 1 week ago

Question

What is the main advantage to this tactic?

Answered: 1 week ago

Question

What administrative cost items are associated with this tactic?

Answered: 1 week ago

Question

What is the full-cost budget?

Answered: 1 week ago