Jones Products manufactures and sells to wholesalers approximately 500,000 packages per year of underwater markers at $3.99 per package. Annual costs for the production and sale of this quantity are shown in the table.
Jones Products manufactures and sells to wholesalers approximately 500.000 packages per year of underwater markers at $3.99 per package. Annual costs for the production and sale of this quantity are shown in the table. Direct materials Direct labor Overhead Selling expenses Administrative expenses Total costs and expenses $ 648,888 168,000 489,00 209,980 133,990 $1,613,000 A new wholesaler has offered to buy 83.000 packages for $3.33 each. These markers would be marketed under the wholesaler's name and would not affect Jones Products's 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. . 35% of the normal annual overhead costs are fixed at any production level from 450.000 to 600.000 units. The remaining 65% of the annual overhead costs are 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. Required: Complete the three-column comparative income statement that shows the following. (Round your Intermediate calculations and per unlt 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. the annual overhead costs are 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. Required: 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. Answer is not complete. New Per Unit Amounts Total Normal New Normal Volume Combined Business Volume Business 3.84 s 3.44 $ 1,920,000 $ 285,520 X $ 2,205,520 X s Sales Variable costs: Direct materials 1.280 DO Direct labor 0.320 0.768 X 1.280 0.480 0.768 % 640,000 160,000 384,000 X 106,240 39,840 63,744 x 746,240 199,840 447,744 Variable overhead 1,184,000 Total variable costs Contribution margin 2.368 1.582 X $ 2.528 0.852 % 209,824 75,696 1,393,824 811,698 $ 738,000 Fixed costs: OOOO
