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on Kargin Income Statement ,000 units) Dets aterials abor on margin . erhead meral and administrative Per Unit $15.00 2.00 4.00 2.50 2.00 1.50 $ 3.00 Annual Total $4,000,000 440,000 1,200,000 800,000 2,000,000 640,000 480,000 $ 960,000

on Kargin Income Statement ,000 units) Dets aterials abor on margin . erhead meral and administrative Per Unit $15.00 2.00 4.00 2.50 2.00 1.50 $ 3.00 Annual Total $4,000,000 440,000 1,200,000 800,000 2,000,000 640,000 480,000 $ 960,000

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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Exercise 10-13 (Algo) Special offer pricing LO P7 Farrow Company reports the following annual results. Contribution Margin Income Statement Sales (320,000 unita) Variable costs Direct materials Direct labor Overhead Contribution margin Fixed costs Fixed overhead Fixed general and administrative Incone Required A Required B Compute the income or loss for the special offer. Note: Round your "Per Unit" answers to 2 decimal places. SPECIAL OFFER ANALYSIS Sales Variable costs Direct materials Direct labor Variable overhead Contribution margin Per Unit $15.00 The company receives a special offer for 32.000 units at $12 per unit. The additional sales would not affect its normal sales. Variable costs per unit would be the same for the special offer as they are for the normal units. The special offer would require incremental fixed overhead of $128,000 and incremental fixed general and administrative costs of $138,000. Fixed overhead Fixed general and administrative (a) Compute the income or loss for the special offer. (b) Should the company accept or reject the special offer? Complete this question by entering your answers in the tabs below. Income (los) 2.00 4.00 2.50 6.50 $ 2.00 1.50 $ 3.00 Annual Total $ 4,800,000 Per Unit 440,000 1,200,000 800,000 2,000,000 2.00 4.00 2.50 640,000 480,000 $ 960,000 15.00 $ 6.50 2.00 1.50 3.00 $ Total Required B 4,800,000 640,000 1,280,000 800,000 2,080,000 2,080,000
Transcribed Image Text:Exercise 10-13 (Algo) Special offer pricing LO P7 Farrow Company reports the following annual results. Contribution Margin Income Statement Sales (320,000 unita) Variable costs Direct materials Direct labor Overhead Contribution margin Fixed costs Fixed overhead Fixed general and administrative Incone Required A Required B Compute the income or loss for the special offer. Note: Round your "Per Unit" answers to 2 decimal places. SPECIAL OFFER ANALYSIS Sales Variable costs Direct materials Direct labor Variable overhead Contribution margin Per Unit $15.00 The company receives a special offer for 32.000 units at $12 per unit. The additional sales would not affect its normal sales. Variable costs per unit would be the same for the special offer as they are for the normal units. The special offer would require incremental fixed overhead of $128,000 and incremental fixed general and administrative costs of $138,000. Fixed overhead Fixed general and administrative (a) Compute the income or loss for the special offer. (b) Should the company accept or reject the special offer? Complete this question by entering your answers in the tabs below. Income (los) 2.00 4.00 2.50 6.50 $ 2.00 1.50 $ 3.00 Annual Total $ 4,800,000 Per Unit 440,000 1,200,000 800,000 2,000,000 2.00 4.00 2.50 640,000 480,000 $ 960,000 15.00 $ 6.50 2.00 1.50 3.00 $ Total Required B 4,800,000 640,000 1,280,000 800,000 2,080,000 2,080,000
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