JART manufactures and sells underwater markers. Its contribution margin income statement follows Contribution Margin Income Statement For Year Ended December 31 Sales (590,000 units) Variable costs Direct materials Direct labor Varlable overhead Contribution margin Fixed costs Fixed overhead Per Unit $ 6.00 Annual Total $ 3,540,000 1.63 0.47 0.50 961,700 277,300 295,000 2,006,000 3.40 0.20 118,000 Fixed general and administrative 0.15 88,500 Income $ 3.05 $ 1,799,500 A potential customer offers to buy 69,000 units for $3.00 each. These sales would not affect the company's sales through its normal channels. Detals about the special offer follow. • Direct materials cost per unit and variable overhead cost per unit would not change • Direct labor cost per unit would be $0.50 because the offer would require overtime pay Accepting the offer would require incremental fixed general and administrative costs of $6,900. Accepting the offer would require no incremental fixed overhead costs. Required: 1. Compute income from the special offer. 2. Should the company accept or reject the special offer?

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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JART manufactures and sells underwater markers. Its contribution margin income statement follows
Contribution Hargin Income Statement
Per Unit
$ 6.00
For Year Ended December 31
Sales (590,000 units)
Variable costs
Direct materials
Direct labor
Varlable overhead
Contribution margin
Fixed costs
Fixed overhead
Annual Total
$3,540,000
1.63
0.47
961,700
277,300
295,000
2,006,000
0.50
3.40
0.20
118,000
Fixed general and administrative
0.15
88,500
Income
$ 3.05
$ 1,799,500
A potential customer offers to buy 69,000 units for $3.00 each. These sales would not affect the company's sales through its normal
channels. Detals about the special offer follow.
• Direct materials cost per unit and variable overhead cost per unit would not change
• Direct labor cost per unit would be $0.50 because the offer would require overtime pay
Accepting the offer would require incremental fixed general and administrative costs of $6,900.
Accepting the offer would require no incremental fixed overhead costs.
Required:
1. Compute income from the special offer.
2. Should the company accept or reject the special offer?
Transcribed Image Text:JART manufactures and sells underwater markers. Its contribution margin income statement follows Contribution Hargin Income Statement Per Unit $ 6.00 For Year Ended December 31 Sales (590,000 units) Variable costs Direct materials Direct labor Varlable overhead Contribution margin Fixed costs Fixed overhead Annual Total $3,540,000 1.63 0.47 961,700 277,300 295,000 2,006,000 0.50 3.40 0.20 118,000 Fixed general and administrative 0.15 88,500 Income $ 3.05 $ 1,799,500 A potential customer offers to buy 69,000 units for $3.00 each. These sales would not affect the company's sales through its normal channels. Detals about the special offer follow. • Direct materials cost per unit and variable overhead cost per unit would not change • Direct labor cost per unit would be $0.50 because the offer would require overtime pay Accepting the offer would require incremental fixed general and administrative costs of $6,900. Accepting the offer would require no incremental fixed overhead costs. Required: 1. Compute income from the special offer. 2. Should the company accept or reject the special offer?
requirea:
1. Compute income from the special offer.
2. Should the company accept or reject the special offer?
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Compute income from the special offer. (Round your "Per Unit" answers to 2 decimal places.)
Special Offer Analysis
Per Unit
Total
Contribution margin
0.00
Fixed overhead
Fixed general and administrative
Income (loss)
0.00
< Raquired 1
Required 2 >
Transcribed Image Text:requirea: 1. Compute income from the special offer. 2. Should the company accept or reject the special offer? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute income from the special offer. (Round your "Per Unit" answers to 2 decimal places.) Special Offer Analysis Per Unit Total Contribution margin 0.00 Fixed overhead Fixed general and administrative Income (loss) 0.00 < Raquired 1 Required 2 >
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