Cullumber Company produces golf discs which it normally sells to retailers for $7 each. The cost of manufacturing 15,400 golf discs is: Materials Labor Variable overhead Fixed overhead Total Cullumber also incurs 7% sales commission ($0.49) on each disc sold. McGee Corporation offers Cullumber $5.00 per disc for 5.700 discs. McGee would sell the discs under its own brand name in foreign markets not yet served by Cullumber. If Cullumber accepts the offer. It will incur a one-time fixed cost of $5.100 due to the rental of an imprinting machine. No sales commission will result from the special order. Assume there is sufficient capacity to accommodate the special order. (a) Prepare an incremental analysis for the special order. (Enter negative amounts using either a negative sign preceding the number eg -45 or parentheses eg. (45)) Net Income Increase (Decrease) Revenues Materials Labor $8,162 22,792 16,632 31.570 $79.156 Variable overhead Cost of equipment rental Net Income S $ Reject Order $ Accept Order 28.500 (3021) (8,436) (6,156) $ $ 28.500 (3021) (8.436) (6,156)
Cullumber Company produces golf discs which it normally sells to retailers for $7 each. The cost of manufacturing 15,400 golf discs is: Materials Labor Variable overhead Fixed overhead Total Cullumber also incurs 7% sales commission ($0.49) on each disc sold. McGee Corporation offers Cullumber $5.00 per disc for 5.700 discs. McGee would sell the discs under its own brand name in foreign markets not yet served by Cullumber. If Cullumber accepts the offer. It will incur a one-time fixed cost of $5.100 due to the rental of an imprinting machine. No sales commission will result from the special order. Assume there is sufficient capacity to accommodate the special order. (a) Prepare an incremental analysis for the special order. (Enter negative amounts using either a negative sign preceding the number eg -45 or parentheses eg. (45)) Net Income Increase (Decrease) Revenues Materials Labor $8,162 22,792 16,632 31.570 $79.156 Variable overhead Cost of equipment rental Net Income S $ Reject Order $ Accept Order 28.500 (3021) (8,436) (6,156) $ $ 28.500 (3021) (8.436) (6,156)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Cullumber Company produces golf discs which it normally sells to retailers for $7 each. The cost of manufacturing 15,400 golf discs is:
Materials
Labor
Variable overhead
Fixed overhead
Total
Revenues
Materials
Cullumber also incurs 7% sales commission ($0.49) on each disc sold.
McGee Corporation offers Cullumber $5.00 per disc for 5,700 discs. McGee would sell the discs under its own brand name in foreign markets not yet served by Cullumber. If Cullumber accepts the offer, it will incur a one-time fixed cost of $5,100 due to the rental of an imprinting machine. No sales commission will result from the special order.
Assume there is sufficient capacity to accommodate the special order.
(a)
Prepare an incremental analysis for the special order. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Labor
Variable overhead
$ 8,162
22.792
16.632
31.570
Net income
$79,156
Cost of equipment rental
$
$
Reject
Order
$
Accept
Order
28,500
(3,021)
(8,436)
(6,156)
$
$
Net Income
Increase
(Decrease)
28,500
(3,021)
(8,436)
(6,156)
Transcribed Image Text:(b)
Should Cullumber accept the special order?
Cullumber should
the special order.
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