Pardo Company produces a single product and has capacity to produce 180,000 units per month. Costs to produce its current monthly sales of 144,000 units follow. The normal selling price of the product is $120 per unit. A new customer offers to purchase 36,000 units for $64.80 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 Costs at 144,000 Units $ 1,800,000 2,160,000 1,728,000 Per Unit $ 12.50 15.00 12.00 17.50 15.00 2,520,000 2,160,000 $ 72.00 $ 10,368,000 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? 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.) Variable costs SPECIAL OFFER ANALYSIS Contribution margin Fixed costs Fixed overhead Fixed general and administrative Income Per Unit Total
Pardo Company produces a single product and has capacity to produce 180,000 units per month. Costs to produce its current monthly sales of 144,000 units follow. The normal selling price of the product is $120 per unit. A new customer offers to purchase 36,000 units for $64.80 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 Costs at 144,000 Units $ 1,800,000 2,160,000 1,728,000 Per Unit $ 12.50 15.00 12.00 17.50 15.00 2,520,000 2,160,000 $ 72.00 $ 10,368,000 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? 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.) Variable costs SPECIAL OFFER ANALYSIS Contribution margin Fixed costs Fixed overhead Fixed general and administrative Income Per Unit Total
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 180,000 units per month. Costs to produce its current monthly
sales of 144,000 units follow. The normal selling price of the product is $120 per unit. A new customer offers to purchase 36,000 units
for $64.80 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
Costs at 144,000
Units
$ 1,800,000
2,160,000
1,728,000
Per Unit
$ 12.50
15.00
12.00
17.50
15.00
2,520,000
2,160,000
$ 72.00
$ 10,368,000
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?
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.)
Variable costs
SPECIAL OFFER ANALYSIS
Contribution margin
Fixed costs
Fixed overhead
Fixed general and administrative
Income
Per Unit
Total
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