Contribution Margin Income StatementPer Unit$ 7.00For Year Ended December 31Sales (480,000 units)Variable costsDirect materialsDirect laborVariable overheadContribution marginFixed costsFixed overheadFixed general and administrativeIncome1.520.380.704.400.300.20$ 3.90Required:1. Compute income from the special offer.2. Should the company accept or reject the special offer?Required 1 Required 2A potential customer offers to buy 58,000 units for $3.70 each. These sales would not affect the company's sales through its normalchannels. Details about the special offer follow.Contribution margin• Direct materials cost per unit and variable overhead cost per unit would not change.• Direct labor cost per unit would be $0.56 because the offer would require overtime pay.• Accepting the offer would require incremental fixed general and administrative costs of $5,800.• Accepting the offer would require no incremental fixed overhead costs.Fixed overheadFixed general and administrativeIncome (loss)Annual Total$ 3,360,000Complete this question by entering your answers in the tabs below.729,600182,400336,0002,112,000< Required 1144,00096,000$ 1,872,000Compute income from the special offer. (Round your "Per Unit" answers to 2 decimal places.)Special Offer AnalysisPer UnitTotalRequired 2 >

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Description: Contribution Margin Income StatementPer Unit$ 7.00For Year Ended December 31Sales (480,000 units)Variable costsDirect materialsDirect laborVariable overheadContribution marginFixed costsFixed overheadFixed general and administrativeIncome1.520.380.7

Special orders can be profitable, if the revenue from the order exceeds the incremental cost of…

Business

Accounting

or Year Ended December 31 ales (480,000 units) ariable costs Direct materials Direct labor Variable overhead ontribution margin ixed costs Fixed overhead Fixed general and administrative Per Unit $ 7.00 1.52 0.38 0.70 4.40 0.30 0.20 00 Annual Total $ 3,360,000 729,600 182,400 336,000 2,112,000 144,000 96,000 72 000

or Year Ended December 31 ales (480,000 units) ariable costs Direct materials Direct labor Variable overhead ontribution margin ixed costs Fixed overhead Fixed general and administrative Per Unit $ 7.00 1.52 0.38 0.70 4.40 0.30 0.20 00 Annual Total $ 3,360,000 729,600 182,400 336,000 2,112,000 144,000 96,000 72 000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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