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Exercise 23-13 (Algo) Special offer pricing LO P7 Farrow Company reports the following annual results. Per Unit $ 15.00 Annual Total $ 6,900,000 Contribution Margin Income Statement Sales (460,000 units) Variable costs Direct materials Direct labor Overhead Contribution margin Fixed costs Pixed overhead Fixed general and administrative Income 2.00 4.00 2.50 6.50 920,000 1,840,000 1,150,000 2,990,000 2.00 1.50 920,000 690,000 $ 1,380,000 $ 3.00 The company receives a special offer for 46,000 units at $12 per unit. The additional sales would not affect its normal sales. Variable costs per unit would be the same for the special offer as they are for the normal units. The special offer would require incremental fixed overhead of $184,000 and incremental fixed general and administrative costs of $198,000. (a) Compute the income or loss for the special offer. (b) Should the company accept or reject the special offer? Complete this question by entering your answers in the tabs below. Required A Required B Compute the income or loss for the special offer. (Round your "Per Unit" answers to 2 decimal places.) SPECIAL OFFER ANALYSIS Per Unit Total U peny uv www.pure costs per unit would be the same for the special offer as they are for the normal units. The special offer would red fixed overhead of $184,000 and incremental fixed general and administrative costs of $198,000. (a) Compute the income or loss for the special offer. (b) Should the company accept or reject the special offer? Complete this question by entering your answers in the tabs below. Required A Required B Compute the income or loss for the special offer. (Round your "Per Unit" answers to 2 decimal places.) SPECIAL OFFER ANALYSIS Per Unit Total Contribution margin 0.00 0 0 inoma (inssi 0.00 $ Labor 4.00 1,840,000 Overhead 2.50 1,150,000 Contribution margin 6.50 2,990,000 Fixed costs Fixed overhead 2.00 920,000 Fixed general and administrative 1.50 690,000 Income $ 3.00 $ 1,380,000 The company receives a special offer for 46,000 units at $12 per unit. The additional sales would not affect its normal sa costs per unit would be the same for the special offer as they are for the normal units. The special offer would require inc fixed overhead of $184,000 and incremental fixed general and administrative costs of $198,000. (a) Compute the income or loss for the special offer. (b) Should the company accept or reject the special offer? Complete this question by entering your answers in the tabs below. Required A Required B Should the company accept or reject the special offer? Should the company accept or reject the special offer?
