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 $
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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