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.

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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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
Required:
1. Compute income from the special offer.
2. Should the company accept or reject the special offer?
811,200
280,800
364,000
2,184,000
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.
Answer is not complete.
Complete this question by entering your answers in the tabs below.
< Prev
5 of 8
Next >
Transcribed Image Text: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 Required: 1. Compute income from the special offer. 2. Should the company accept or reject the special offer? 811,200 280,800 364,000 2,184,000 104,000 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. Answer is not complete. Complete this question by entering your answers in the tabs below. < Prev 5 of 8 Next >
www.
1. Compute income from the special offer.
2. Should the company accept or reject the special offer?
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Compute income from the special offer. (Round your "Per Unit" answers to 2 decimal places.)
Special Offer Analysis
Sales
Variable costs
Direct materials
Direct labor
Variable overhead
Contribution margin
Fixed overhead
Fixed general and administrative
Income (loss)
Answer is not complete.
✓
✔
✓
$
< Required 1
Per Unit
0.00
0.00 $
< Prev
Total
Required 2 >
5 of 8
0
0
Next >
Return to question
Transcribed Image Text:www. 1. Compute income from the special offer. 2. Should the company accept or reject the special offer? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute income from the special offer. (Round your "Per Unit" answers to 2 decimal places.) Special Offer Analysis Sales Variable costs Direct materials Direct labor Variable overhead Contribution margin Fixed overhead Fixed general and administrative Income (loss) Answer is not complete. ✓ ✔ ✓ $ < Required 1 Per Unit 0.00 0.00 $ < Prev Total Required 2 > 5 of 8 0 0 Next > Return to question
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