Farrow Company reports the following annual results.
Contribution Margin Income Statement Per Unit Annual
Total Sales (420,000 units) $15.00 $6,300,000
Variable costs:
Direct materials 2.008 40,000
Direct labor 4.001 80,000
Overhead 2.50 1,050,000
Contribution margin 6.50 2,730,000
Fixed costs:
Fixed overhead 2.008 40,000
Fixed general and administrative 1.50 630,000
Income $3.00 $1,260,000
The company receives a special offer for 42,000 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 $168,000 and incremental fixed general and administrative costs of $181,000.
Required:
a. Compute the income or loss for the special offer.
b. Should the company accept or reject the special offer?
Answers: 2
Other questions on the subject: Business
Business, 22.06.2019 10:00, dtaylor7755
How has internet access changed and affected globalization from 2003 to 2013? a ten percent increase in internet access has had little effect on globalization. a twenty percent decrease in internet access has had little effect on globalization. a thirty percent increase in internet access has sped up globalization. a fifty percent decrease in internet access has slowed down globalization.
Answers: 1
Business, 22.06.2019 17:30, samanthaepperson
The purchasing agent for a company that assembles and sells air-conditioning equipment in a latin american country noted that the cost of compressors has increased significantly each time they have been reordered. the company uses an eoq model to determine order size. what are the implications of this price escalation with respect to order size? what factors other than price must be taken into consideration?
Answers: 1
Business, 23.06.2019 01:40, sospls352
During a liquidation, a partner's capital account balance drops below zero. what should happen? select one: a. the deficit balance should be removed from the accounting records with only the remaining partners sharing in future gains and losses. b. the partner with a deficit should contribute enough assets to offset the deficit balance if he is solvent. c. the other partners should contribute enough assets to offset the amount of deficit if the partner with a deficit is insolvent. d. both b & c
Answers: 3
You know the right answer?
Farrow Company reports the following annual results.
Contribution Margin Income Statement Per Unit...
Questions in other subjects:
Mathematics, 10.04.2020 20:25
Mathematics, 10.04.2020 20:25
