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Jones Products manufactures and sells to wholesalers approximately 100,000 packages per year of underwater markers at $3.95 per package. Annual costs for the production and
Jones Products manufactures and sells to wholesalers approximately 100,000 packages per year of underwater markers at $3.95 per package. Annual costs for the production and sale of this quantity are shown in the table $128,000 32,000 96, 000 40,000 27,000 $323, 000 Direct materials Direct labor Overhead Selling expenses Administrative expenses Total costs and expenses A new wholesaler has offered to buy 17,000 packages for $3.41 each. These markers would be marketed under the wholesaler's namee and would not affect Jones Products' sales through its normal channels. A study of the costs of this additional business reveals the following Direct materials costs are 100% variable Per unit direct labor costs for the additional units would be 50% higher than normal because their production would require overtime pay at 1/2 times the usual labor rate 25% of the normal annual overhead costs are fixed at any production level from 50,000 to 200,000 units. The remaining 75% of the annual overhead cost is variable with volume . Accepting the new business would involve no additional selling expenses Accepting the new business would increase administrative expenses by a $4,000 fixed amount. Requirec Complete the three-column comparative income statement that shows the following (Round your intermediate calculations and per unit cost answers to 3 decimals) 1. Annual operating income without the special order. 2. Annual operating income received from the new business only 3. Combined annual operating income from normal business and the new business Total Normal New Business Volume Volume Normal New BusinessCombined Sales Variable costs Fixed costs
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