Part 2.pdf 3 / 4 - 100% + ACUTOZU Part 2 - Incremental Analysis A Company produces golf discs which it normally sells to retailers for $6 each. The cost of manufacturing 25,000 golf discs is: Materials Labor Variable overhead Fixed overhead Total $ 10,000 30,000 20,000 40.000 $100.000 They also incur 5% sales commission (50.30) on each disc sold ABC Corporation offers this company S4 25 per disc for 3,000 discs. ABC would sell the discs under its own brand name in foreign markets not yet served by the Company. If the Company accepts the offer its fixed overhead will increase from $40,000 to $43,000 due to the purchase of a new imprinting machine. No sales commission will result from the special order Requirements: (a) Prepare an incremental analysis for the special order (b) Should the Company accept the special order? Why or why not? Crane Company has decided to introduce a new product. The new product can be manufactured by either a capital-intensive method or a labor-intensive method. The manufacturing method will not affect the quality of the product. The estimated manufacturing costs by the two methods are as follows. Capital-Intensive Labor-Intensive $6.30 per unit $6.80 per unit $7.56 per unit $9.56 per unit Direct materials Direct labor Variable overhead Fixed manufacturing costs $3.78 per unit $5.28 per unit $3,179.280 $2,197,168 Crane market research department has recommended an introductory unit sales price of $40.32. The incremental selling expenses are estimated to be $695,472 annually plus 52.52 for each unit sold, regardless of manufacturing method. Part 2.pdf 3 / 4 - 100% + ACUTOZU Part 2 - Incremental Analysis A Company produces golf discs which it normally sells to retailers for $6 each. The cost of manufacturing 25,000 golf discs is: Materials Labor Variable overhead Fixed overhead Total $ 10,000 30,000 20,000 40.000 $100.000 They also incur 5% sales commission (50.30) on each disc sold ABC Corporation offers this company S4 25 per disc for 3,000 discs. ABC would sell the discs under its own brand name in foreign markets not yet served by the Company. If the Company accepts the offer its fixed overhead will increase from $40,000 to $43,000 due to the purchase of a new imprinting machine. No sales commission will result from the special order Requirements: (a) Prepare an incremental analysis for the special order (b) Should the Company accept the special order? Why or why not? Crane Company has decided to introduce a new product. The new product can be manufactured by either a capital-intensive method or a labor-intensive method. The manufacturing method will not affect the quality of the product. The estimated manufacturing costs by the two methods are as follows. Capital-Intensive Labor-Intensive $6.30 per unit $6.80 per unit $7.56 per unit $9.56 per unit Direct materials Direct labor Variable overhead Fixed manufacturing costs $3.78 per unit $5.28 per unit $3,179.280 $2,197,168 Crane market research department has recommended an introductory unit sales price of $40.32. The incremental selling expenses are estimated to be $695,472 annually plus 52.52 for each unit sold, regardless of manufacturing method
