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Variable costs

Variable costs

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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FURY produces and sells skateboards. Its contribution margin income statement follows. Contribution Margin Income Statement Per Unit $61.00 For Year Ended December 31 Sales (91,000 units) Variable costs. Direct materials Direct labor Variable overhead Contribution margin Fixed costs Fixed overhead Fixed general and administrative Income 31.00 8.00 12.00 10.00 3.00 2.00 $ 5.00 Annual Total $ 5,551,000 2,821,000 728,000 1,092,000 910,000 Required: 1. Compute income or loss from the special offer. 2. Should the company accept or reject the special offer? 273,000 182,000 $ 455,000 A potential customer offers to buy 11,100 units for $53.00 each. These sales would not affect the company's sales through its normal channels. Details of the special offer follow. • Variable costs per unit would not change. • Accepting the offer would require incremental fixed overhead costs of $11,100. . Accepting the offer would require incremental fixed general and administrative costs of $16,650.
Transcribed Image Text:FURY produces and sells skateboards. Its contribution margin income statement follows. Contribution Margin Income Statement Per Unit $61.00 For Year Ended December 31 Sales (91,000 units) Variable costs. Direct materials Direct labor Variable overhead Contribution margin Fixed costs Fixed overhead Fixed general and administrative Income 31.00 8.00 12.00 10.00 3.00 2.00 $ 5.00 Annual Total $ 5,551,000 2,821,000 728,000 1,092,000 910,000 Required: 1. Compute income or loss from the special offer. 2. Should the company accept or reject the special offer? 273,000 182,000 $ 455,000 A potential customer offers to buy 11,100 units for $53.00 each. These sales would not affect the company's sales through its normal channels. Details of the special offer follow. • Variable costs per unit would not change. • Accepting the offer would require incremental fixed overhead costs of $11,100. . Accepting the offer would require incremental fixed general and administrative costs of $16,650.
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