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Goshford Company produces a single product and has capacity to produce 115,000 units per month. Costs to produce its current sales of 92,000 units follow. The regular selling price of the product is $148 per unit. Management is approached by a new customer who wants to purchase 23,000 units of the product for $76.50 per unit. If the order is accepted, there will be no additional fixed manufacturing overhead and no additional fixed selling and administrative expenses. The customer is not in the company's regular 5 selling territory, so there will be a $7.00 per unit shipping expense in addition to the regular variable selling and administrative points expenses. costs at Per Unit 92,006 Units Direct materials $12.50 $1,150,080 eBook Direct labor 15.06 1 380,080 Variable manufacturing overhead 10.00 920,608 Fixed manufacturing overhead 171 50 1,610,006 Variable selling and administrative expenses 17.80 13.00 1,564, 080 Fixed selling and administrative expenses 1, 196, 609 Totals $85.06 $ 7,820,060 Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $76.50 per unit. Normal Volume Additional Combined Volume Total Sales $ Costs and expenses: Direct materials Direct labor Variable overhead Variable selling and admin. exp Total costs and expenses Fixed selling and admin. exp Total costs and expenses Net income (loss) $ 0 $ 0 $4 Exercise 23-9 Sales mix determination and analysis LO A1 5 Colt Company owns a machine that can produce two specialized products. Production time for Product TLX is three units per hour and points for Product MTV is five units per hour. The machine's capacity is 2.100 hours per year. Both products are sold to a single customer who has agreed to buy all of the company's output up to a maximum of 3,570 units of Product TLX and 4.940 units of Product MTV. Selling prices and variable costs per unit to produce the products follow. is per unit Book Selling price per unit Product TLX $11. 50 Product MTV Variable costs per unit $6.90 3.45 4 . 14 Determine the company's most profitable sales mix and the contribution margin that results from that sales mix. (Round cost per unit answers to 2 decimal places.) Product TLX Product MTV Contribution margin per unit S 11.50 S 6.90 Units produced per hour Contribution margin per production hour S 8.05 2.76 Product TLX Product MTV Total Maximum number of units to be sold 3.570 4,940 Hours required to produce maximum units For Most Profitable Sales Mix Product TLX Product MTV Total Hours dedicated to the production of each product Units produced for most profitable sales mix Contribution margin per unit Total contribution margin
