Firefox File Edit View History Bookmarks Tools Window Help ? ? ? 68% C%), Sun 4:

Question

Firefox File Edit View History Bookmarks Tools Window Help ? ? ? 68% C%), Sun 4:54 PM Atika Ishtiaq C E newconnect.mheducation.com X C Chegg Study | Guided Solutions X ?? https://newconnect.mheducation.com/flow/connect.html ? a Search Ch 10 Ex 10-2 6 Saved Help Save & Exit Submit Check my work Exercise 10-2 Accept new business or not LO A1 Farrow Co. expects to sell 400,000 units of its product in the next period with the following results. points Sales (400,000 units) Costs and expenses Sklpped $6,000,000 Direct materials Direct labor Overhead Selling expense:s Administrative expenses 800,000 1, 600,000 400,000 600,000 1,028, 000 eBook Hint Total costs and expensea Net income Ask $1,572,000 Print ReferencesThe company has an opportunity to sell 40,000 additional units at $13 per unit. The additional sales would not affect its current expected sales. Direct materials and labor costs per unit would be the same for the additional units as they are for the regular units. However, the additional volume would create the following incremental costs: (1) total overhead would increase by 15% and (2) administrative expenses would increase by $172,000. Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $13 per unit. Normal Volume Volume Total Costs and expenses Me Prev 1of 1111 Next Hill 1032

Explanation / Answer

a) Analysis :

b) The company should accept the offer

Normal Sales Additional units Total Sales Sales 6000000 520000 6520000 Cost and expense Direct material 800000 80000 880000 Direct labour 1600000 160000 1760000 Overhead 400000 60000 460000 Selling expense 600000 0 600000 Administrative expense 1028000 172000 1200000 Total expense 4428000 472000 4900000 Net income 1572000 48000 1620000

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.