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Pardo Company produces a single product and has capacity to produce 155,000 units per month. Costs to produce its current monthly sales of 124,000
Pardo Company produces a single product and has capacity to produce 155,000 units per month. Costs to produce its current monthly sales of 124,000 units follow. The normal selling price of the product is $124 per unit. A new customer offers to purchase 31,000 units for $65.70 per unit. If the special offer is accepted, there will be no additional fixed overhead and no additional fixed general and administrative costs. The special offer would not affect its normal sales. Direct materials Costs at 124,000 Units $ 1,550,000 Per Unit $ 12.50 Direct labor Variable overhead Fixed overhead Fixed general and administrative Totals 15.00 1,860,000 13.00 1,612,000 17.50 2,170,000 15.00 1,860,000 $ 73.00 $ 9,052,000 (a) Compute the income from the special offer. (b) Should the company accept the special offer? Complete this question by entering your answers in the tabs below. Complete this question by entering your answers in the tabs below. Required A Required B Compute the income for the special offer. Note: Round your "Per Unit" answers to 2 decimal places. SPECIAL OFFER ANALYSIS Variable costs Contribution margin Fixed costs Fixed overhead Fixed general and administrative Income Per Unit Total 0.00 0 $ 0.00 $ 0 Complete this question by entering your answers in the tabs below. Required A Required B Should the company accept the special offer? Should the company accept the special offer?
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