Farrow Company reports the following annual results. Contribution Margin Income Statement Sales (300, 000 units) Variable costs Direct materials Direct labor Per Unit Annual Total $ 15.00 $ 4,500,000 2.00 4.00 2.50 6.50 600,000 1,200,000 750,000 1,950,000 Overhead Contribution margin Fixed costs Fixed overhead 2.00 600,000 450,000 Fixed general and administrative 1.50 Income $ 3.00 $ 900,000 The company receives a special offer for 30,000 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 requ incremental fixed overhead of $120,000 and incremental fixed general and administrative costs of $129,000. (a) Compute the income or loss for the special offer. (b) Should the company accept or reject the special offer? X Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required A Required B Compute the income or loss for the special offer. (Round your "Per Unit" answers to 2 decimal places.) SPECIAL OFFER ANALYSIS Per Unit Total Sales $ 13.00 $ 390,000 Variable costs Direct materials 2.00 (60,000) Direct labor 4.00 (120,000) Variable overhead 2.50 (75,000) Contribution margin 4.50 135,000 Fixed costs Fixed overhead 2.50 X (120,000) Fixed general and administrative 2.00 X (129,000) Income (loss) 2$ 0.00 $ (114,000) < Required A Required B >
Farrow Company reports the following annual results. Contribution Margin Income Statement Sales (300, 000 units) Variable costs Direct materials Direct labor Per Unit Annual Total $ 15.00 $ 4,500,000 2.00 4.00 2.50 6.50 600,000 1,200,000 750,000 1,950,000 Overhead Contribution margin Fixed costs Fixed overhead 2.00 600,000 450,000 Fixed general and administrative 1.50 Income $ 3.00 $ 900,000 The company receives a special offer for 30,000 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 requ incremental fixed overhead of $120,000 and incremental fixed general and administrative costs of $129,000. (a) Compute the income or loss for the special offer. (b) Should the company accept or reject the special offer? X Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required A Required B Compute the income or loss for the special offer. (Round your "Per Unit" answers to 2 decimal places.) SPECIAL OFFER ANALYSIS Per Unit Total Sales $ 13.00 $ 390,000 Variable costs Direct materials 2.00 (60,000) Direct labor 4.00 (120,000) Variable overhead 2.50 (75,000) Contribution margin 4.50 135,000 Fixed costs Fixed overhead 2.50 X (120,000) Fixed general and administrative 2.00 X (129,000) Income (loss) 2$ 0.00 $ (114,000) < Required A Required B >
Cornerstones of Cost Management (Cornerstones Series)
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Author:Don R. Hansen, Maryanne M. Mowen
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Problem 21E: Ellerson Company provided the following information for the last calendar year: During the year,...
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Question
![Farrow Company reports the following annual results.
Annual Total
Per Unit
$ 15.00
Contribution Margin Income Statement
Sales (300,000 units)
Variable costs
Direct materials
Direct labor
$ 4,500,000
2.00
4.00
600,000
1,200,000
750,000
1,950,000
2.50
Overhead
Contribution margin
Fixed costs
Fixed overhead
6.50
2.00
600,000
450,000
Fixed general and administrative
1.50
Income
$ 3.00
$ 900,000
The company receives a special offer for 30,000 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 $120,000 and incremental fixed general and administrative costs of $129,000.
(a) Compute the income or loss for the special offer.
(b) Should the company accept or reject the special offer?
X Answer is complete but not entirely correct.
Complete this question by entering your answers in the tabs below.
Required A
Required B
Compute the income or loss for the special offer. (Round your "Per Unit" answers to 2 decimal places.)
SPECIAL OFFER ANALYSIS
Per Unit
Total
Sales
2$
13.00
2$
390,000
Variable costs
Direct materials
2.00
(60,000)
Direct labor
4.00
(120,000)
Variable overhead
2.50
(75,000)
Contribution margin
4.50
135,000
Fixed costs
Fixed overhead
2.50 X
(120,000)
Fixed general and administrative
2.00
(129,000)
Income (loss)
0.00
$
(114,000)
< Required A
Required B
>
O00
O000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd5971670-0a42-4bc2-9ebc-b3e74c2e71cb%2F6292a430-2e77-4901-9c87-ef34aa876bbd%2Fhbrzltuh_processed.png&w=3840&q=75)
Transcribed Image Text:Farrow Company reports the following annual results.
Annual Total
Per Unit
$ 15.00
Contribution Margin Income Statement
Sales (300,000 units)
Variable costs
Direct materials
Direct labor
$ 4,500,000
2.00
4.00
600,000
1,200,000
750,000
1,950,000
2.50
Overhead
Contribution margin
Fixed costs
Fixed overhead
6.50
2.00
600,000
450,000
Fixed general and administrative
1.50
Income
$ 3.00
$ 900,000
The company receives a special offer for 30,000 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 $120,000 and incremental fixed general and administrative costs of $129,000.
(a) Compute the income or loss for the special offer.
(b) Should the company accept or reject the special offer?
X Answer is complete but not entirely correct.
Complete this question by entering your answers in the tabs below.
Required A
Required B
Compute the income or loss for the special offer. (Round your "Per Unit" answers to 2 decimal places.)
SPECIAL OFFER ANALYSIS
Per Unit
Total
Sales
2$
13.00
2$
390,000
Variable costs
Direct materials
2.00
(60,000)
Direct labor
4.00
(120,000)
Variable overhead
2.50
(75,000)
Contribution margin
4.50
135,000
Fixed costs
Fixed overhead
2.50 X
(120,000)
Fixed general and administrative
2.00
(129,000)
Income (loss)
0.00
$
(114,000)
< Required A
Required B
>
O00
O000
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