Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Pardo Company produces a single product and has capacity to produce 200,000 units per month. Costs to produce its current monthly sales of 160,000

image text in transcribedimage text in transcribed

Pardo Company produces a single product and has capacity to produce 200,000 units per month. Costs to produce its current monthly sales of 160,000 units follow. The normal selling price of the product is $106 per unit. A new customer offers to purchase 40,000 units for $64.80 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 Per Unit Costs at 160,000 Units $ 12.50 $ 2,000,000 15.00 2,400,000 11.00 1,760,000 17.50 2,800,000 16.00 2,560,000 $ 72.00 $ 11,520,000 (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. Required A Required B Compute the income for the special offer. (Round your "Per Unit" answers to 2 decimal places.) Variable costs SPECIAL OFFER ANALYSIS Contribution margin Fixed costs Fixed overhead Fixed general and administrative Income Per Unit Total 0.00 0 $ 0.00 $ < Required A Required B > 0 Radar Company sells bikes for $480 each. The company currently sells 4,400 bikes per year and could make as many as 4,740 bikes per year. The bikes cost $295 each to make: $190 in variable costs per bike and $105 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 340 bikes for $460 each. Incremental fixed costs to make this order are $70 per bike. No other costs will change if this order is accepted. (a) Compute the income for the special offer. (b) Should Radar accept this offer? (a) Special offer analysis Per Unit Total Contribution margin Income (b) The company should

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting What the Numbers Mean

Authors: David H. Marshall, Wayne W. McManus, Daniel F. Viele

10th edition

9780077515904, 007802529X, 77515900, 978-0078025297

More Books

Students also viewed these Accounting questions

Question

Why would a person fear success?

Answered: 1 week ago