JART manufactures and sells underwater markers. Its contribution margin income statement follows. Sales (430,000 units) Variable...

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JART manufactures and sells underwater markers. Its contribution margin income statement follows. Sales (430,000 units) Variable costs Direct materials Direct labor Contribution Margin Income Statement For Year Ended December 31 Per Unit $ 6.00 Annual Total $ 2,580,000 1.37 589,100 0.33 141,900 0.60 258,000 3.70 1,591,000 0.20 86,000 0.15 $ 3.35 64,500 $ 1,440,500 Variable overhead Contribution margin Fixed costs Fixed overhead Fixed general and administrative Income A potential customer offers to buy 53,000 units for $2.80 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 $0.40 because the offer would require overtime pay. Accepting the offer would require incremental fixed general and administrative costs of $5,300. Accepting the offer would require no incremental fixed overhead costs. Required: 1. Compute income from the special offer. 2. Should the company accept or reject the special offer? JART manufactures and sells underwater markers. Its contribution margin income statement follows. Sales (430,000 units) Variable costs Direct materials Direct labor Contribution Margin Income Statement For Year Ended December 31 Per Unit $ 6.00 Annual Total $ 2,580,000 1.37 589,100 0.33 141,900 0.60 258,000 3.70 1,591,000 0.20 86,000 0.15 $ 3.35 64,500 $ 1,440,500 Variable overhead Contribution margin Fixed costs Fixed overhead Fixed general and administrative Income A potential customer offers to buy 53,000 units for $2.80 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 $0.40 because the offer would require overtime pay. Accepting the offer would require incremental fixed general and administrative costs of $5,300. Accepting the offer would require no incremental fixed overhead costs. Required: 1. Compute income from the special offer. 2. Should the company accept or reject the special offer?

Answer rating: 100% (QA)

1 Income from Special Offer Calculation Given data Sales price per unit for the special offer 280 Direct materials cost per unit 033 no change Direct ... View the full answer