Gruden Company produces golf discs which it normally sells to retailers for $7 each. The cost of manufacturing 16,700 golf discs is: Materials Labor = Total Variable overhead Fixed overhead Gruden also incurs 6% sales commission ($0.41) on each disc sold. McGee Corporation offers Gruden $4.82 per disc for 5,110 discs. McGee would sell the discs under its own brand name in foreign markets not yet served by Gruden. If Gruden accepts the offer, its fixed overhead will increase from $32,899 to $38,779 due to the purchase of a new imprinting machine. No sales commission will result from the special order. Revenues (a) Prepare an incremental analysis for the special order. (Round computations for per unit cost to 4 decimal places, e.g. 15.2500 and all other computations and final answers to the nearest whole dollar, e.g. 5,725. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Materials Labor Variable overhead Fixed overhead Sales commissions Net income $ 8,350 24,883 17,702 32,899 $83,834 $ Gruden should $ Reject Order (b) Should Gruden accept the special order? the special order. C $ Accept Order $ Net Income Increase (Decrease)
Gruden Company produces golf discs which it normally sells to retailers for $7 each. The cost of manufacturing 16,700 golf discs is: Materials Labor = Total Variable overhead Fixed overhead Gruden also incurs 6% sales commission ($0.41) on each disc sold. McGee Corporation offers Gruden $4.82 per disc for 5,110 discs. McGee would sell the discs under its own brand name in foreign markets not yet served by Gruden. If Gruden accepts the offer, its fixed overhead will increase from $32,899 to $38,779 due to the purchase of a new imprinting machine. No sales commission will result from the special order. Revenues (a) Prepare an incremental analysis for the special order. (Round computations for per unit cost to 4 decimal places, e.g. 15.2500 and all other computations and final answers to the nearest whole dollar, e.g. 5,725. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Materials Labor Variable overhead Fixed overhead Sales commissions Net income $ 8,350 24,883 17,702 32,899 $83,834 $ Gruden should $ Reject Order (b) Should Gruden accept the special order? the special order. C $ Accept Order $ Net Income Increase (Decrease)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Gruden Company produces golf discs which it normally sells to retailers for $7 each. The cost of manufacturing 16,700
golf discs is:
Materials
Labor
Variable overhead
Fixed overhead
Total
Gruden also incurs 6% sales commission ($0.41) on each disc sold.
McGee Corporation offers Gruden $4.82 per disc for 5,110 discs. McGee would sell the discs under its own brand name in
foreign markets not yet served by Gruden. If Gruden accepts the offer, its fixed overhead will increase from $32,899 to
$38,779 due to the purchase of a new imprinting machine. No sales commission will result from the special order.
Revenues
(a)
Prepare an incremental analysis for the special order. (Round computations for per unit cost to 4 decimal
places, e.g. 15.2500 and all other computations and final answers to the nearest whole dollar, e.g. 5,725.
Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g.
(45).)
Materials.
Labor
Variable overhead
Fixed overhead
Sales commissions
Net income
$ 8,350
$
Gruden should
24,883
17,702
32,899
$83,834
$
Reject
Order
(b)
Should Gruden accept the special order?
the special order.
$
Accept
Order
$
Net Income
Increase
(Decrease)
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