Business, 10.05.2020 06:57 dee1334

Gruden Company produces golf discs which it normally sells to retailers for $7 each. The cost of manufacturing 19,500 golf discs is:

Materials $ 8,775

Labor 30,225

Variable overhead 19,305

Fixed overhead 38,415

Total $96,720

Gruden also incurs 8% sales commission ($0.55) on each disc sold.

McGee Corporation offers Gruden $4.77 per disc for 4,920 discs. McGee would sell the discs under its own brand name in foreign markets not yet served by Gruden. If Gruden accepts the offer, its fixed overhead will increase from $38,415 to $44,725 due to the purchase of a new imprinting machine. No sales commission will result from the special order.

(a)

Prepare an incremental analysis for the special order. (Round answers to 0 decimal places, e. g. 1250. Enter negative amounts using either a negative sign preceding the number e. g. -45 or parentheses e. g. (45).)

Accept

Order Net Income
Revenues $23468 $23468

Materials

Labor

Variable overhead

Fixed overhead

Sales commissions $0 $0

Net income

Answers: 2

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Gruden Company produces golf discs which it normally sells to retailers for $7 each. The cost of man...

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