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Pharoah Company produces golf discs which it normally sells to retailers for $6 each. The cost of manufacturing 25,000 golf discs is: Materials $9,000 Labor 27,000 Variable overhead 18,000 Fixed overhead 36,000 Total $90,000 Pharoah also incurs 5% sales commission ($0.30) on each disc sold. Rudd Corporation offers Pharoah $4.30 per disc for 2,700 discs. Rudd would sell the discs under its own brand name in foreign markets not served by Pharoah. If Pharoah accepts the offer, its fixed overhead will increase from $36,000 to $38,700 due to the purchase of a new imprinting machine. No sales commission will result from the special order. Prepare an incremental analysis for the special order. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any field blank. Enter O for the amounts.) Reject Order Accept Order Net Income Effect Revenues + $ $ 0 $

Pharoah Company produces golf discs which it normally sells to retailers for $6 each. The cost of manufacturing 25,000 golf discs is: Materials $9,000 Labor 27,000 Variable overhead 18,000 Fixed overhead 36,000 Total $90,000 Pharoah also incurs 5% sales commission ($0.30) on each disc sold. Rudd Corporation offers Pharoah $4.30 per disc for 2,700 discs. Rudd would sell the discs under its own brand name in foreign markets not served by Pharoah. If Pharoah accepts the offer, its fixed overhead will increase from $36,000 to $38,700 due to the purchase of a new imprinting machine. No sales commission will result from the special order. Prepare an incremental analysis for the special order. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any field blank. Enter O for the amounts.) Reject Order Accept Order Net Income Effect Revenues + $ $ 0 $

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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Pharoah Company produces golf discs which it normally sells to retailers for $6 each. The cost of manufacturing 25,000 golf discs is: Materials. $9,000 Labor 27,000 == Variable overhead 18,000 Fixed overhead 36,000 Total $90,000 Pharoah also incurs 5% sales commission ($0.30) on each disc sold. Rudd Corporation offers Pharoah $4.30 per disc for 2,700 discs. Rudd would sell the discs under its own brand name in foreign markets not served by Pharoah. If Pharoah accepts the offer, its fixed overhead will increase from $36,000 to $38,700 due to the purchase of a new imprinting machine. No sales commission will result from the special order. Prepare an incremental analysis for the special order. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any field blank. Enter O for the amounts.) Reject Order Accept Order Net Income Effect Revenues + $ $ 0 $
Transcribed Image Text:Pharoah Company produces golf discs which it normally sells to retailers for $6 each. The cost of manufacturing 25,000 golf discs is: Materials. $9,000 Labor 27,000 == Variable overhead 18,000 Fixed overhead 36,000 Total $90,000 Pharoah also incurs 5% sales commission ($0.30) on each disc sold. Rudd Corporation offers Pharoah $4.30 per disc for 2,700 discs. Rudd would sell the discs under its own brand name in foreign markets not served by Pharoah. If Pharoah accepts the offer, its fixed overhead will increase from $36,000 to $38,700 due to the purchase of a new imprinting machine. No sales commission will result from the special order. Prepare an incremental analysis for the special order. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any field blank. Enter O for the amounts.) Reject Order Accept Order Net Income Effect Revenues + $ $ 0 $
$ Reject Order Revenues Materials Labor Variable Overhead Fixed Overhead + Sales Commissions Net Income /(Loss) eTextbook and Media Should Pharoah accept the special order? Pharoah $ accept the special order. 0 0 0 0 0 0 0 $ $ Accept Order $ $ Net Income Effect 4 MacBook Air QL Acc QL Acc Vie Acc Qu Acco Qu ACCC Que Acco Que Accom Que Accou Que Multip Ques Multipl
Transcribed Image Text:$ Reject Order Revenues Materials Labor Variable Overhead Fixed Overhead + Sales Commissions Net Income /(Loss) eTextbook and Media Should Pharoah accept the special order? Pharoah $ accept the special order. 0 0 0 0 0 0 0 $ $ Accept Order $ $ Net Income Effect 4 MacBook Air QL Acc QL Acc Vie Acc Qu Acco Qu ACCC Que Acco Que Accom Que Accou Que Multip Ques Multipl
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