Problem 23-1A Analysis of income effects of additional business LO A1 Jones Products manufactures and sells to wholesalers approximately 300,000 packages per year of underwater markers at $3.85 per package. Annual costs for the production and sale of this quantity are shown in the table. Direct materials $ 384,000 Direct labor 96,000 Overhead 288,000 Selling expenses 120,000 Administrative expenses 80,000 Total costs and expenses $ 968,000 A new wholesaler has offered to buy 50,000 packages for $3.31 each. These markers would be marketed under the wholesalers name and would not affect Jones Products sales through its normal channels. A study of the costs of this additional business reveals the following: Direct materials costs are 100% variable. Per unit direct labor costs for the additional units would be 50% higher than normal because their production would require overtime pay at 1 times the usual labor rate. 30% of the normal annual overhead costs are fixed at any production level from 250,000 to 400,000 units. The remaining 70% of the annual overhead cost is variable with volume. Accepting the new business would involve no additional selling expenses. Accepting the new business would increase administrative expenses by a $5,000 fixed amount. Required: Complete the three-column comparative income statement that shows the following (Round your intermediate calculations and per unit cost answers to 3 decimals) 1. Annual operating income without the special order. 2. Annual operating income received from the new business only. 3. Combined annual operating income from normal business and the new business.

Problem 23-1A Analysis of income effects of additional business LO A1 Jones Products manufactures and sells to wholesalers approximately 300,000 packages per year of underwater markers at $3.85 per package. Annual costs for the production and sale of this quantity are shown in the table. Direct materials Direct labor $384,000 96,000 288,000 120,000 Overhead Selling expenses Administrative 80,000 expenses Total costs and $968,000 expenses A new wholesaler has offered to buy 50,000 packages for $3.31 each. These markers would be marketed under the wholesaler's name and would not affect Jones Products' sales through its normal channels. A study of the costs of this additional business reveals the following: Direct materials costs are 100% variable. Per unit direct labor costs for the additional units would be 50% higher than normal because their production would require overtime pay at 12 times the usual labor rate 30% of the normal annual overhead costs are fixed at any production level from 250,000 to 400,000 units. The remaining 70% of the annual overhead cost is variable with volume. Accepting the new business would involve no additional selling expenses. Accepting the new business would increase administrative expenses by a $5,000 fixed amount. Required: Complete the three-column comparative income statement that shows the following (Round your intermediate calculations and per unit cost answers to 3 decimals) 1. Annual operating income without the special order. 2. Annual operating income received from the new business only 3. Combined annual operating income from normal business and the new business. Per Unit Amounts Normal Volume Total Normal New New Combined Volume Business Business Sales Variable costs: Fixed costs