Pardo Company produces a single product and has capacity to produce 110,000 units per month. Costs to produce its current monthly sales of 88,000 units follow. The normal selling price of the product is $116 per unit. A new customer offers to purchase 22,000 units for $65.70 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 15.00 $73.00 Costs at 88,000 Units $1,100,000 Variable costs 1,320,000 1,144,000 1,540,000 1,320,000 $6,424,000 (a) Compute the income from the special offer (b) Should the company accept the special offer? Complete this question by entering your answers in the tabs below. Required A Required B Compute the income for the special offer, (Round your "Per Unit" answers to 2 decimal places.) SPECIAL OFFER ANALYSIS Per Unit Total
Pardo Company produces a single product and has capacity to produce 110,000 units per month. Costs to produce its current monthly sales of 88,000 units follow. The normal selling price of the product is $116 per unit. A new customer offers to purchase 22,000 units for $65.70 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 15.00 $73.00 Costs at 88,000 Units $1,100,000 Variable costs 1,320,000 1,144,000 1,540,000 1,320,000 $6,424,000 (a) Compute the income from the special offer (b) Should the company accept the special offer? Complete this question by entering your answers in the tabs below. Required A Required B Compute the income for the special offer, (Round your "Per Unit" answers to 2 decimal places.) SPECIAL OFFER ANALYSIS Per Unit Total
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please help me with required a and b thanku
Transcribed Image Text:Pardo Company produces a single product and has capacity to produce 110,000 units per month. Costs to produce its current monthly
sales of 88,000 units follow. The normal selling price of the product is $116 per unit. A new customer offers to purchase 22,000 units
for $65.70 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
15.00
$73.00
Variable costs
Complete this question by entering your answers in the tabs below.
Contribution margin
Fixed costs
Required A Required B
Compute the income for the special offer, (Round your "Per Unit" answers to 2 decimal places.)
Per Unit
Total
SPECIAL OFFER ANALYSIS
Fixed overhead
Fixed general and administrative
Income
Costs at 88,000
Units
$1,100,000
1,320,000
1,144,000
5
1,540,000
1,320,000
$6,424,000
Megled A
0.00
0.00 $
Required B >
0
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