Gruden Company
cybacatx
gruden_company_question.docGruden Company produces golf discs which it normally sells to retailers for $6.96 each. The cost of manufacturing 19,000 golf discs is:
|
Materials |
|
$10,260 |
|
|
Labor |
|
30,400 |
|
|
Variable overhead |
|
18,430 |
|
|
Fixed overhead |
|
37,430 |
|
|
Total |
|
$96,520 |
|
Gruden also incurs 4% sales commission ($0.28) on each disc sold. McGee Corporation offers Gruden $5 per disc for 5,800 discs. McGee would sell the discs under its own brand name in foreign markets not yet served by Gruden. If Gruden accepts the offer, its fixed overhead will increase from $37,430 to $43,345 due to the purchase of a new imprinting machine. No sales commission will result from the special order.
Prepare an incremental analysis for the special order. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
|
|
|
Reject Order |
|
Accept Order |
|
Net Income Increase (Decrease) |
|
|
Revenues |
|
$ |
|
$ |
|
$ |
|
|
Materials |
|
|
|
|
|
|
|
|
Labor |
|
|
|
|
|
|
|
|
Variable overhead |
|
|
|
|
|
|
|
|
Fixed overhead |
|
|
|
|
|
|
|
|
Sales commissions |
|
|
|
|
|
|
|
|
Net income |
|
$ |
|
$ |
|
$ |
|
Should Gruden accept the special order?
|
Gruden should |
|
|
