JART manufactures and sells underwater markers. Its contribution margin income statement follows. Contribution Margin Income Statement Per Unit $ 7.00 For Year Ended December 31 Sales (520,000 units) Variable costs Direct materials Direct labor Variable overhead Contribution margin Fixed costs Fixed overhead Fixed general and administrative Income 1.56 0.54 0.70 4.20 0.20 0.15 $ 3.85 Annual Total $ 3,640,000 811,200 280,800 364,000 2,184,000 Required: 1. Compute income from the special offer. 2. Should the company accept or reject the special offer? 104,000 78,000 $ 2,002,000 A potential customer offers to buy 62,000 units for $3.80 each. These sales would not affect the company's sales through its normal channels. Details about the special offer follow. • Direct materials cost per unit and variable overhead cost per unit would not change. • Direct labor cost per unit would be $0.72 because the offer would require overtime pay. • Accepting the offer would require incremental fixed general and administrative costs of $6,200. • Accepting the offer would require no incremental fixed overhead costs.
JART manufactures and sells underwater markers. Its contribution margin income statement follows. Contribution Margin Income Statement Per Unit $ 7.00 For Year Ended December 31 Sales (520,000 units) Variable costs Direct materials Direct labor Variable overhead Contribution margin Fixed costs Fixed overhead Fixed general and administrative Income 1.56 0.54 0.70 4.20 0.20 0.15 $ 3.85 Annual Total $ 3,640,000 811,200 280,800 364,000 2,184,000 Required: 1. Compute income from the special offer. 2. Should the company accept or reject the special offer? 104,000 78,000 $ 2,002,000 A potential customer offers to buy 62,000 units for $3.80 each. These sales would not affect the company's sales through its normal channels. Details about the special offer follow. • Direct materials cost per unit and variable overhead cost per unit would not change. • Direct labor cost per unit would be $0.72 because the offer would require overtime pay. • Accepting the offer would require incremental fixed general and administrative costs of $6,200. • Accepting the offer would require no incremental fixed overhead costs.
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter11: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 11.2E: Identify cost graphs The following cost graphs illustrate various types of cost behavior: For each...
Related questions
Question
Please do not give solution in image format thanku
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning