Farrow Company reports the following annual results. Contribution Margin Income Statement Sales (340,000 units) Per Unit...
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Farrow Company reports the following annual results. Contribution Margin Income Statement Sales (340,000 units) Per Unit Annual Total $ 15.00 $ 5,100,000 Variable costs Direct materials 680,000 1,360,000 850,000 2.00 Direct labor 4.00 Overhead Contribution margin 2.50 6.50 2,210, 000 Fixed costs Fixed overhead 2.00 680, 000 Fixed general and administrative 1.50 510,000 $ 3.00 $ 1,020,000 Income The company receives a special offer for 34,000 units at $13 per unit. The additional sales would not affect its normal sales. Variable costs per unit would be the same for the special offer as they are for the normal units. The special offer would require incremental fixed overhead of $136,000 and incremental fixed general and administrative costs of $146,000. (a) Compute the income or loss for the special offer. (b) Should the company accept or reject the special offer? Farrow Company reports the following annual results. Contribution Margin Income Statement Sales (340,000 units) Per Unit Annual Total $ 15.00 $ 5,100,000 Variable costs Direct materials 680,000 1,360,000 850,000 2.00 Direct labor 4.00 Overhead Contribution margin 2.50 6.50 2,210, 000 Fixed costs Fixed overhead 2.00 680, 000 Fixed general and administrative 1.50 510,000 $ 3.00 $ 1,020,000 Income The company receives a special offer for 34,000 units at $13 per unit. The additional sales would not affect its normal sales. Variable costs per unit would be the same for the special offer as they are for the normal units. The special offer would require incremental fixed overhead of $136,000 and incremental fixed general and administrative costs of $146,000. (a) Compute the income or loss for the special offer. (b) Should the company accept or reject the special offer?
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Answer a Computation of income or loss for the special offer Sp... View the full answer
Related Book For
Financial Accounting Tools for business decision making
ISBN: 978-0470534779
6th Edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
Posted Date:
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