Sunland Company produces golf discs which it normally sells to retailers for $7 each. The cost of manufacturing 19,10 golf discs is: Materials $ 9,550 Labor 29,414 Variable overhead 20,437 Fixed overhead 38,009 Total $97,410 Sunland also incurs 5% sales commission ($0.35) on each disc sold. McGee Corporation offers Sunland $4.90 per disc for 6,000 discs. McGee would sell the discs under its own brand na in foreign markets not yet served by Sunland. If Sunland accepts the offer, it will incur a one-time fixed cost of $6,170 to the rental of an imprinting machine. No sales commission will result from the special order. Assume there is sufficie capacity to accommodate the special order. (a) Prepare an incremental analysis for the special order. (Enter negative amounts using either a negative sign preceding number e.g. -45 or parentheses e.g. (45).) Reject Order Accept Order Net Income Increase (Decrease) Revenues Senter a dollar amount Materials Labor Variable overhead enter a dollar amount enter a dollar amount enter a dollar amount Şenter a dollar amount enter a dollar amount enter a dollar amount enter a dollar amount Senter a dollar amount enter a dollar amount enter a dollar amount enter a dollar amount Cost of equipment rental enter a dollar amount Net income Senter a total amount enter a dollar amount $enter a total amount enter a dollar amount Senter a total amount (b) Should Sunland accept the special order? Sunland should select an option eTextbook and Media acceptreject the special order.

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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Transcribed Image Text:Sunland Company produces golf discs which it normally sells to retailers for $7 each. The cost of manufacturing 19,100 golf discs is: Materials $ 9,550 Labor 29,414 Variable overhead 20,437 Fixed overhead Total 38,009 $97,410 Sunland also incurs 5% sales commission ($0.35) on each disc sold. McGee Corporation offers Sunland $4.90 per disc for 6,000 discs. McGee 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 $6,170 due to the rental of an imprinting machine. No sales commission will result from the special order. Assume there is sufficient capacity to accommodate the special order. (a) 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).) Reject Order Accept Order Net Income Increase (Decrease) Revenues $enter a dollar amount Şenter a dollar amount Materials Labor enter a dollar amount enter a dollar amount enter a dollar amount enter a dollar amount Şenter a dollar amount enter a dollar amount enter a dollar amount Variable overhead enter a dollar amount Cost of equipment rental enter a dollar amount Net income $enter a total amount enter a dollar amount enter a dollar amount Senter a total amount enter a dollar amount enter a dollar amount Senter a total amount (b) Should Sunland accept the special order? Sunland should select an option eTextbook and Media acceptreject the special order.

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