Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please answer all parts for positive feedback :) Pardo Company produces a single product and has capacity to produce 135,000 units per month. Costs to

image text in transcribedimage text in transcribedimage text in transcribed

Please answer all parts for positive feedback :)

Pardo Company produces a single product and has capacity to produce 135,000 units per month. Costs to produce its current monthly sales of 108,000 units follow. The normal selling price of the product is $102 per unit. A new customer offers to purchase 27,000 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 $ 12.50 15.00 12.00 17.50 15.00 $ 72.00 Costs at 108,000 Units $ 1,350,000 1,620,000 1,296,000 1,890,000 1,620,000 $ 7,776,000 (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.) SPECIAL OFFER ANALYSIS Per Unit Total Variable costs Contribution margin Fixed costs Fixed overhead Fixed general and administrative Income B Required A Required B Should the company accept the special offer? Should the company accept the special offer?

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

Students also viewed these Accounting questions