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Gruden Company produces golf discs which it normally sells to retailers for $ 7 each. The cost of manufacturing 16,700 golf discs is: Materials $

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 ($ 0.41) on each disc sold. McGee Corporation offers Gruden $ 4.82 per disc for 5,110 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. (Round answers to 0 decimal places, e.g. 1250. 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 $ enter a dollar amount rounded to 0 decimal places $ enter a dollar amount rounded to 0 decimal places $ enter a dollar amount rounded to 0 decimal places
Materials enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places
Labor enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places
Variable overhead enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places
Fixed overhead enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places
Sales commissions enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places enter a dollar amount rounded to 0 decimal places
Net income $ enter a dollar amount rounded to 0 decimal places $ enter a dollar amount rounded to 0 decimal places $ enter a dollar amount rounded to 0 decimal places

(b) Should Gruden accept the special order?

Gruden should select: accept/reject the special order .

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