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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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![Contribution Margin Income Statement
Per Unit
$ 7.00
For Year Ended December 31
Sales (480,000 units)
Variable costs
Direct materials
Direct labor
Variable overhead
Contribution margin
Fixed costs
Fixed overhead
Fixed general and administrative
Income
1.52
0.38
0.70
4.40
0.30
0.20
$ 3.90
Required:
1. Compute income from the special offer.
2. Should the company accept or reject the special offer?
Required 1 Required 2
A potential customer offers to buy 58,000 units for $3.70 each. These sales would not affect the company's sales through its normal
channels. 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 overhead
Fixed general and administrative
Income (loss)
Annual Total
$ 3,360,000
Complete this question by entering your answers in the tabs below.
729,600
182,400
336,000
2,112,000
< Required 1
144,000
96,000
$ 1,872,000
Compute income from the special offer. (Round your "Per Unit" answers to 2 decimal places.)
Special Offer Analysis
Per Unit
Total
Required 2 >](https://content.bartleby.com/qna-images/question/78f3565e-53ba-4923-8265-3865fe80e6fd/28ad99a4-52e2-4df2-af59-69fd1bd1bfe3/jzsgtbgk_thumbnail.png)
Transcribed Image Text:Contribution Margin Income Statement
Per Unit
$ 7.00
For Year Ended December 31
Sales (480,000 units)
Variable costs
Direct materials
Direct labor
Variable overhead
Contribution margin
Fixed costs
Fixed overhead
Fixed general and administrative
Income
1.52
0.38
0.70
4.40
0.30
0.20
$ 3.90
Required:
1. Compute income from the special offer.
2. Should the company accept or reject the special offer?
Required 1 Required 2
A potential customer offers to buy 58,000 units for $3.70 each. These sales would not affect the company's sales through its normal
channels. 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 overhead
Fixed general and administrative
Income (loss)
Annual Total
$ 3,360,000
Complete this question by entering your answers in the tabs below.
729,600
182,400
336,000
2,112,000
< Required 1
144,000
96,000
$ 1,872,000
Compute income from the special offer. (Round your "Per Unit" answers to 2 decimal places.)
Special Offer Analysis
Per Unit
Total
Required 2 >
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