eturnUrl-https%3A%2F%2F term 4-Part B (Ch. 10-12) Jones Products manufactures an

Question

eturnUrl-https%3A%2F%2F term 4-Part B (Ch. 10-12) Jones Products manufactures and sells to wholesalers approximately 400000 packages per year of underwater markers at $3.88 per package. Annual costs for the production and sale of this quantity are shown in the table irect materials Direct labor Overhead Selling expenses Administrative expenses Total costs and expenses 384,800 160,000 107,e00 $1,291,eee A new wholesaler has offered to buy 67,000 packages for $3.35 each. These markers would be marketed under the wholesalers name and would not affect Jo nes Products' sales through its normal channels. A study of the costs of this additional business reveals the following: Direct materials costs are 100% variable. · for the additional units would be 50% higher than normal because their production require overtime pay at 1½ times the usual labor rate. 35% of the normal the annual annual overhe ad costs are fixed at any production level from 350,000 to 500,000 units. The remaining 65% of , cost is variable with volume Accepting the new business would involve no additional selling expenses . Accepting the new business would increase administrative expenses by a $3,000 fixed amount Complete the three-column comparative income statement that shows the fol unit cost answers to 3 decimels) Round your intermediate calculations and per Pra 1 of 13Next> :21 AM ere to search

Explanation / Answer

Per Unit Amounts Total Normal Volume New Business Normal Volume New Business Combined Sales 3.88 3.35 1552000 224450 1776450 Variable costs: Direct Materials 1.28 1.28 512000 85760 597760 Direct labor 0.32 0.48 128000 32160 160160 Overhead(384000*65%) 0.624 0.624 249600 41808 291408 Selling expenses 0.4 0 160000 0 160000 Total variable costs 2.624 2.384 1049600 159728 1209328 Contribution Margin 1.256 0.966 502400 64722 567122 Fixed costs: Overhead(384000*35%) 134400 0 134400 Administrative expenses 167000 3000 170000 Total fixed expenses 301400 3000 304400 Net Income 201000 61722 262722

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