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Please explain your answer in a legible manner. Thank you so much for your time !!! Exercise 23-2 Accept new business or not A1 Farrow

Please explain your answer in a legible manner. Thank you so much for your time !!! image text in transcribed
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Exercise 23-2 Accept new business or not A1 Farrow Co. expects to sell 150,000 units of its product in the next period with the following results. Sales (150,000 units) $2,250,000 Costs and expenses Direct materials 300,000 Direct labor 600.000 Overhead... 150,000 Selling expenses 225.000 Administrative expenses 385,500 Total costs and expenses 660.500 Net income 589,500 The company has an opportunity to sell 15,000 additional units at $12 per unit. The additional sales would not affect its current expected sales. Direct materials and labor costs per unit would be the same for the additional units as they are for the regular units. However, the additional volume would create the following incremental costs: (1) total overhead would increase by 15% and (2) administrative expenses would increase by $64,500. Prepare an analysis to determine whether the company should accept or reject the offer to sell additional units at the reduced price of $12 per unit. Check Income increase, $3,000

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