Answered step by step
Verified Expert Solution
Question
1 Approved Answer
JART manufactures and sells underwater markers. Its contribution margin income statement follows. For Year Ended December 31 Sales (440,000 units) Variable costs Direct materials Direct
JART manufactures and sells underwater markers. Its contribution margin income statement follows. For Year Ended December 31 Sales (440,000 units) Variable costs Direct materials Direct labor Variable overhead Contribution margin Fixed costs Fixed overhead Fixed general and administrative Income Contribution Margin Income Statement Per Unit $ 7.00 . . " 1.48 0.52 0.70 4.30 0.30 0.25 $ 3.75 A potential customer offers to buy 54,000 units for $3.70 each. These sales would not affect the company's sales through its normal channels. Details about the special offer follow. Annual Total $ 3,080,000 651,200 228,800 308,000 1,892,000 Required: 1. Compute income from the special offer. 2. Should the company accept or reject the special offer? 132,000 110,000 $ 1,650,000 Direct materials cost per unit and variable overhead cost per unit would not change. Direct labor cost per unit would be $0.65 because the offer would require overtime pay. Accepting the offer would require incremental fixed general and administrative costs of $5,400. Accepting the offer would require no incremental fixed overhead costs.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started