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me Statement Per Unit $ 6.00 1.44 0.36 0.60 3.60 0.20 0.15 $ 3.25 Annual Total $ 2,400,000 576,000 144,000 240,000 1,440,000 80,000 60,000 $ 1,300,000 s for $3.20 each. These sales would not affect the co

me Statement Per Unit $ 6.00 1.44 0.36 0.60 3.60 0.20 0.15 $ 3.25 Annual Total $ 2,400,000 576,000 144,000 240,000 1,440,000 80,000 60,000 $ 1,300,000 s for $3.20 each. These sales would not affect the co

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Contribution Margin Income Statement For Year Ended December 31 Sales (400,000 units) Variable costs Direct materials Direct labor Variable overhead Contribution margin Fixed costs Fixed overhead Fixed general and administrative Income Per Unit $ 6.00 Required 1 Required 2 1.44 0.36 0.60 3.60 0.20 0.15 $ 3.25 Required: 1. Compute income from the special offer. 2. Should the company accept or reject the special offer? Contribution margin A potential customer offers to buy 50,000 units for $3.20 each. These sales would not affect the company's sales through its normal channels. Details 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 $0.54 because the offer would require overtime pay. • Accepting the offer would require incremental fixed general and administrative costs of $5,000. Accepting the offer would require no incremental fixed overhead costs. Fixed overhead Fixed general and administrative Income (loss) Annual Total $ 2,400,000 Complete this question by entering your answers in the tabs below. 576,000 144,000 240,000 1,440,000 $ 80,000 60,000 $ 1,300,000 Compute income from the special offer. (Round your "Per Unit" answers to 2 decimal places.) Special Offer Analysis Per Unit 0.00 0.00 $ Total 0 0
Transcribed Image Text:Contribution Margin Income Statement For Year Ended December 31 Sales (400,000 units) Variable costs Direct materials Direct labor Variable overhead Contribution margin Fixed costs Fixed overhead Fixed general and administrative Income Per Unit $ 6.00 Required 1 Required 2 1.44 0.36 0.60 3.60 0.20 0.15 $ 3.25 Required: 1. Compute income from the special offer. 2. Should the company accept or reject the special offer? Contribution margin A potential customer offers to buy 50,000 units for $3.20 each. These sales would not affect the company's sales through its normal channels. Details 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 $0.54 because the offer would require overtime pay. • Accepting the offer would require incremental fixed general and administrative costs of $5,000. Accepting the offer would require no incremental fixed overhead costs. Fixed overhead Fixed general and administrative Income (loss) Annual Total $ 2,400,000 Complete this question by entering your answers in the tabs below. 576,000 144,000 240,000 1,440,000 $ 80,000 60,000 $ 1,300,000 Compute income from the special offer. (Round your "Per Unit" answers to 2 decimal places.) Special Offer Analysis Per Unit 0.00 0.00 $ Total 0 0
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