Pardo Company produces a single product and has capacity to produce 105,000 units per month. Costs to produce its current monthly sales of 84,000 units follow. The normal selling price of the product is $144 per unit. A new customer offers to purchase 21,000 units for $63.90 per unit. If the special offer is accepted, there will be no additional fixed overhead and no additional fixed general and administrative costs. The special offer would not affect its normal sales. Direct materials Direct labor Variable overhead Fixed overhead Fixed general and administrative Totals Per Unit $ 12.50 15.00 13.00 17.50 13.00 $ 71.00 (a) Compute the income from the special offer. (b) Should the company accept the special offer? Costs at 84,000 Units $ 1,050,000 1,260,000 1,092,000 1,470,000 1,092,000 $ 5,964,000
Pardo Company produces a single product and has capacity to produce 105,000 units per month. Costs to produce its current monthly sales of 84,000 units follow. The normal selling price of the product is $144 per unit. A new customer offers to purchase 21,000 units for $63.90 per unit. If the special offer is accepted, there will be no additional fixed overhead and no additional fixed general and administrative costs. The special offer would not affect its normal sales. Direct materials Direct labor Variable overhead Fixed overhead Fixed general and administrative Totals Per Unit $ 12.50 15.00 13.00 17.50 13.00 $ 71.00 (a) Compute the income from the special offer. (b) Should the company accept the special offer? Costs at 84,000 Units $ 1,050,000 1,260,000 1,092,000 1,470,000 1,092,000 $ 5,964,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Pardo Company produces a single product and has capacity to produce 105,000 units per month. Costs to produce its current monthly
sales of 84,000 units follow. The normal selling price of the product is $144 per unit. A new customer offers to purchase 21,000 units
for $63.90 per unit. If the special offer is accepted, there will be no additional fixed overhead and no additional fixed general and
administrative costs. The special offer would not affect its normal sales.
Direct materials
Direct labor
Variable overhead
Fixed overhead
Fixed general and administrative
Totals
(a) Compute the income from the special offer.
(b) Should the company accept the special offer?
Required A
Required B
Variable costs
Per Unit
$ 12.50
15.00
13.00
17.50
13.00
$ 71.00
Complete this question by entering your answers in the tabs below.
Contribution margin
Fixed costs
Fixed overhead
Fixed general and administrative
Income
Costs at 84,000
Units
Compute the income for the special offer. (Round your "Per Unit" answers to 2 decimal places.)
SPECIAL OFFER ANALYSIS
< Required A
$ 1,050,000
1,260,000
1,092,000
1,470,000
1,092,000
$ 5,964,000
Per Unit
Total
Required B >
Transcribed Image Text:Pardo Company produces a single product and has capacity to produce 105,000 units per month. Costs to produce its current monthly
sales of 84,000 units follow. The normal selling price of the product is $144 per unit. A new customer offers to purchase 21,000 units
for $63.90 per unit. If the special offer is accepted, there will be no additional fixed overhead and no additional fixed general and
administrative costs. The special offer would not affect its normal sales.
Direct materials
Direct labor
Variable overhead
Fixed overhead
Fixed general and administrative
Totals
(a) Compute the income from the special offer.
(b) Should the company accept the special offer?
Per Unit
$12.50
15.00
13.00
17.50
13.00
$71.00
Required A Required B
Should the company accept the special offer?
Should the company accept the special offer?
Complete this question by entering your answers in the tabs below.
Costs at 84,000
Units
< Required A
$ 1,050,000
1,260,000
1,092,000
1,470,000
1,092,000
$ 5,964,000
Required B >
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