FURY produces and sells skateboards. Its contribution margin income statement follows. Contribution Margin Income Statement For Year Ended December 31 Sales (86,000 units) Variable costs Direct materials Direct labor Variable overhead Contribution margin Fixed costs Fixed overhead Fixed general and administrative Income Per Unit $ 56.00 26.00 7.00 13.00 10.00 3.00 2.00 $5.00 Annual Total $ 4,816,000 2,236,000 602,000 1,118,000 860,000 258,000 172,000 $430,000 A potential customer offers to buy 10,600 units for $48.00 each. These sales would not affect the company's sales through its normal channels. Details of the special offer follow. • Variable costs per unit would not change. • Accepting the offer would require incremental fixed overhead costs of $10,600. . Accepting the offer would require incremental fixed general and administrative costs of $15,900. Required: 1. Compute income or loss from the special offer. 2. Should the company accept or reject the special offer?
FURY produces and sells skateboards. Its contribution margin income statement follows. Contribution Margin Income Statement For Year Ended December 31 Sales (86,000 units) Variable costs Direct materials Direct labor Variable overhead Contribution margin Fixed costs Fixed overhead Fixed general and administrative Income Per Unit $ 56.00 26.00 7.00 13.00 10.00 3.00 2.00 $5.00 Annual Total $ 4,816,000 2,236,000 602,000 1,118,000 860,000 258,000 172,000 $430,000 A potential customer offers to buy 10,600 units for $48.00 each. These sales would not affect the company's sales through its normal channels. Details of the special offer follow. • Variable costs per unit would not change. • Accepting the offer would require incremental fixed overhead costs of $10,600. . Accepting the offer would require incremental fixed general and administrative costs of $15,900. Required: 1. Compute income or loss from the special offer. 2. Should the company accept or reject the special offer?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:FURY produces and sells skateboards. Its contribution margin income statement follows.
For Year Ended December 31
Sales (86,000 units)
Variable costs
Direct materials
Direct labor
Variable overhead
Contribution margin
Fixed costs
Fixed overhead
Fixed general and administrative
Income
.
Contribution Margin Income Statement
Per Unit
$56.00
.
.
26.00
7.00
13.00
10.00
3.00
2.00
$5.00
A potential customer offers to buy 10,600 units for $48.00 each. These sales would not affect the company's sales through its normal
channels. Details of the special offer follow.
Annual Total
$ 4,816,000
2,236,000
602,000
1,118,000
860,000
Required:
1. Compute income or loss from the special offer.
2. Should the company accept or reject the special offer?
258,000
172,000
$ 430,000
Variable costs per unit would not change.
Accepting the offer would require incremental fixed overhead costs of $10,600.
Accepting the offer would require incremental fixed general and administrative costs of $15,900.
Transcribed Image Text:Required 1 Required 2
Compute income or loss from the special offer.
Note: Round your "Per Unit" answers to 2 decimal places.
Special Offer Analysis
Contribution margin
Income (loss)
quind
Per Unit
0.00
0.00 $
Total
Required 2 >
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