Question
Pardo Company produces a single product and has capacity to produce 185,000 units per month. Costs to produce its current monthly sales of 148,000
Pardo Company produces a single product and has capacity to produce 185,000 units per month. Costs to produce its current monthly sales of 148,000 units follow. The normal selling price of the product is $132 per unit. A new customer offers to purchase 37,000 units for $62.10 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 Direct labor Variable overhead Fixed overhead Fixed general and administrative Totals Costs at 148,000 Units $ 1,850,000 2,220,000 Per Unit $ 12.50 15.00 11.00 17.50 13.00 1,924,000 $ 69.00 $ 10,212,000 1,628,000 2,590,000 (a) Compute the income from the special offer. (b) Should the company accept the special offer? Required A Required B Compute the income for the special offer. (Round your "Per Unit" answers to 2 decimal places.) Sales Variable costs SPECIAL OFFER ANALYSIS Contribution margin Fixed costs Fixed overhead Fixed general and administrative Income Per Unit Total 0.00 0 $ 0.00 $ 0 Required A Required B Should the company accept the special offer? Should the company accept the special offer?
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