Moka Golf Club produces golf balls and sells them to its members at a price of $ 7 each. The cost to produce 20,000 golf balls is as follows: Materials $ 10,000 Labour $ 24,000 Variable Overheads $ 20,000 Fixed Overheads $ 50,000 ---------------- $ 104,000 ----------------- The Club has received a request to supply 4,000 balls to a foreign entity at a price of $ 5.00 each. If Moka accepts the offer, its Fixed Overheads will increase by $ 5,000 because it will have to purchase additional equipment. Required: a) Prepare an incremental analysis for rejecting this Special Order.
Moka Golf Club produces golf balls and sells them to its members at a price of $ 7 each. The cost to produce 20,000 golf balls is as follows:
Materials $ 10,000
Labour $ 24,000
Variable
Fixed Overheads $ 50,000
----------------
$ 104,000
-----------------
The Club has received a request to supply 4,000 balls to a foreign entity at a price of $ 5.00 each. If Moka accepts the offer, its Fixed Overheads will increase by $ 5,000 because it will have to purchase additional equipment.
Required:
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