The company has an opportunity to sell 30,000 additional units at $13 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 16% and (2) administrative expenses would increase by $129,000. Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $13 per unit.

Should the company accept or reject the offer?

• The company should reject the offer

• The company should accept the offer

Additional Volume Combined Total Normal Volume Costs and expenses: Total costs and expenses Incremental income (loss) from new business