Answered step by step
Verified Expert Solution
Question
1 Approved Answer
JART manufactures and sells underwater markers. Its contribution margin income statement follows. Annual Total $ 2,400,000 Contribution Margin Income Statement For Year Ended December 31
JART manufactures and sells underwater markers. Its contribution margin income statement follows. Annual Total $ 2,400,000 Contribution Margin Income Statement For Year Ended December 31 Per Unit Sales (400,000 units) $ 6.00 Variable costs Direct materials 1.44 Direct labor 0.36 Variable overhead 0.60 Contribution margin 3.60 Fixed costs Fixed overhead 0.20 Fixed general and administrative 0.15 Income $ 3.25 576,000 144,000 240,000 1,440,000 80,000 60,000 $ 1,300,000 A potential customer offers to buy 50,000 units for $3.20 each. These sales would not affect the company's sales through its normal channels. Details about the special offer follow. Direct materials cost per unit and variable overhead cost per unit would not change. Direct labor cost per unit would be $0.54 because the offer would require overtime pay. Accepting the offer would require incremental fixed general and administrative costs of $5,000. Accepting the offer would require no incremental fixed overhead costs. . . Required: 1. Compute income from the special offer. 2. Should the company accept or reject the special offer? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute income from the special offer. (Round your "Per Unit" answers to 2 decimal places.) Special Offer Analysis Per Unit Total Contribution margin Contribution margin Fixed overhead Fixed general and administrative Income (loss) Compute income from the special offer. (Round your "Per Unit" answe Special Offer Analysis Per Unit Direct labor Direct materials Fixed general and administrative Fixed overhead Fixed overhead Fixed general and administrative Unit answers to Special Offer Analysis Per Unit Fixed general and administrative Fixed overhead Income taxes Sales Variable overhead ma 2. Should the company accept or reject the special offer? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Should the company accept or reject the special offer? Should the company accept or reject the special offer
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