produces golf discs, which it normally sells to re 3 $9,600 31,000 18,000 42,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A4

Transcribed Image Text:Sunland Company produces golf discs, which it normally sells to retailers for $9 each. The cost of manufacturing 20,000 golf discs is:
Materials
Labour
Variable overhead
Fixed overhead
Total
$9,600
31,000
18,000
42,000
$100,600
Sunland also incurs 5% sales commission ($0.45) on each disc sold.
Sipacore Corporation offers Sunland $4.50 per disc for 5,000 discs. Sipacore would sell the discs under its own brand name in foreign
markets not yet served by Sunland. If Sunland accepts the offer, it will incur a one-time fixed cost of $5,100 due to the rental of an
imprinting machine. No sales commission will result from the special order.
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