2e hapter 21 HW Gruden Company produces golf discs which it normally sells to re

Question

2e hapter 21 HW Gruden Company produces golf discs which it normally sells to retailers for $7 each. The cost of manufacturing 20,000 golf discs is: 10,000 30,000 Question 3 Materials Variable overhead 20,000 Fixed overhead 40,000 Total $100,000 Gruden also incurs 5% sales commission ($0.35) on each disc sold. McGee Corporation offers Gruden $4.80 per disc for 5,000 discs. McGee served by Gruden. I would sell the discs under its own brand name in foreign markets not yet If Gruden accepts the offer, its fixed overhead will increase from $40,000 to $46,000 due to the purchase of a new imprinting machine. No sales commission will result from the special order. Obje Prepare an in s and final answers to the nearest whole doliar, e.g. 5,725. Enter negative amounts Net Income Reject Order

Explanation / Answer

particulars

Garudan should accept the order , since there is postive net income from the special order.so, special order should be accepted

particulars

Reject accept Net income increase/(decrease) order order Revenues (5000*4.8) 0            24,000              24,000 Materials ((10000/20000)*5000) 0             (2,500)               (2,500) Labor(30000/20000)*5000 0             (7,500)               (7,500) Variable overhead (20000/20000)*5000             (5,000)               (5,000) Fixed overhead (46000-40000) 0             (6,000)               (6,000) Sales commission 0                    -                        -   Net income 0              3,000                3,000

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