Pardo Company produces a single product and has capacity to produce 105,000 units per month. Costs to produce itscurrent monthly sales of 84,000 units follow. The normal selling price of the product is $134 per unit. A new customeroffers to purchase 21,000 units for $63.00 per unit. If the special offer is accepted, there will be no additional fixedoverhead and no additional fixed general and administrative costs. The special offer would not affect its normal sales.Costs at 84,000UnitsPer Unit$ 1,050,0001,260,0001,008,0001,470,0001,092,000$ 5,880,000Direct materials$ 12.50Direct labor15.00Variable overhead12.00Fixed overhead17.50Fixed general and administrative13.00Totals$ 70.00(a) Compute the income from the special offer.(b) Should the company accept the special offer?Required ARequired BCompute the income for the special offer. (Round your "Per Unit" answers to 2 decimal places.)SPECIAL OFFER ANALYSISPer UnitTotalVariable costsContribution marginFixed costsFixed overheadFixed general and administrativeIncomeRequired ARequired BShould the company accept the special offer?Should the company accept the special offer?

SPECIAL OFFER ANALYSIS Per Unit Total Sales $ 63.00 $ 1,323,000 Less: Variable Costs:…

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 $134 per unit. A new customer offers to purchase 21,000 units for $63.00 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. Costs at 84,000 Units Per Unit $ 12.50 $ 1,050,000 1,260,000 1,008,000 1,470,000 1,092,000 $ 5,880,000 Direct materials Direct labor 15.00 Variable overhead 12.00 Fixed overhead 17.50 13.00 $ 70.00 Fixed general and administrative Totals (a) Compute the income from the special offer. (b) Should the company accept the special offer?

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 $134 per unit. A new customer offers to purchase 21,000 units for $63.00 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. Costs at 84,000 Units Per Unit $ 12.50 $ 1,050,000 1,260,000 1,008,000 1,470,000 1,092,000 $ 5,880,000 Direct materials Direct labor 15.00 Variable overhead 12.00 Fixed overhead 17.50 13.00 $ 70.00 Fixed general and administrative Totals (a) Compute the income from the special offer. (b) Should the company accept the special offer?

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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