Pardo Company produces a single product and has capacity to produce 140,000 units per month. Costs to produce its current monthly sales of 112,000 units follow. The normal selling price of the product is $106 per unit. A new customer offers to purchase 28,000 units for $64.80 per unit. If the special offer is accepted, there will be no additional fixed overhead and no additional fixed general and administrative costs. The special offer would not affect its normal sales. Direct materials Direct labor Variable overhead Fixed overhead Fixed general and administrative Totals (a) Compute the income from the special offer. (b) Should the company accept the special offer? Required A Required B SPECIAL OFFER ANALYSIS Per Unit $ 12.50 15.00 13.00 Complete this question by entering your answers in the tabs below. Variable costs 17.50 14.00 $72.00 Contribution margin Fixed costs Compute the income for the special offer. (Round your "Per Unit" answers to 2 decimal places.) Fixed overhead Fixed general and administrative Income Costs at 112,000 Units $ 1,400,000 1,680,000 1,456,000 1,960,000 1,568,000 $ 8,064,000 < Required A Per Unit Required B Total >
Pardo Company produces a single product and has capacity to produce 140,000 units per month. Costs to produce its current monthly sales of 112,000 units follow. The normal selling price of the product is $106 per unit. A new customer offers to purchase 28,000 units for $64.80 per unit. If the special offer is accepted, there will be no additional fixed overhead and no additional fixed general and administrative costs. The special offer would not affect its normal sales. Direct materials Direct labor Variable overhead Fixed overhead Fixed general and administrative Totals (a) Compute the income from the special offer. (b) Should the company accept the special offer? Required A Required B SPECIAL OFFER ANALYSIS Per Unit $ 12.50 15.00 13.00 Complete this question by entering your answers in the tabs below. Variable costs 17.50 14.00 $72.00 Contribution margin Fixed costs Compute the income for the special offer. (Round your "Per Unit" answers to 2 decimal places.) Fixed overhead Fixed general and administrative Income Costs at 112,000 Units $ 1,400,000 1,680,000 1,456,000 1,960,000 1,568,000 $ 8,064,000 < Required A Per Unit Required B Total >
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 4EB: Dimitri Designs has capacity to produce 30,000 desk chairs per year and is currently selling all...
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