Goshford Company produces a single product and has capacity to produce 185,000 units per month. Costs to produce its current sales of 148,000 units follow. The regular selling price of the product is $118 per unit. Management is approached by a new customer who wants to purchase 37,000 units of the product for $78.30 per unit. If the order is accepted, there will be no additional fixed manufacturing overhead and no additional fixed selling and administrative expenses. The customer is not in the company's regular selling territory, so there will be a $6.60 per unit shipping expense in addition to the regular variable selling and administrative expenses. Costs at Per Unit 148, 000 Units S 1,850, 000 2,220, 000 1,628,000 2,590, 000 2,220,000 2,368,000 $12,876, 000 Direct materials Direct labor $12.50 15.00 Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses 11.00 17.50 15.00 16.00 Totals $87.00 Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $78.30 per unit. Determine whether management should accept or reject the new business. Complete this question by entering your answers in the tabs below. Accept or Reject Net Income Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $78.30 per unit. Additional Combined Normal Volume Volume Total Costs and expenses:
Goshford Company produces a single product and has capacity to produce 185,000 units per month. Costs to produce its current sales of 148,000 units follow. The regular selling price of the product is $118 per unit. Management is approached by a new customer who wants to purchase 37,000 units of the product for $78.30 per unit. If the order is accepted, there will be no additional fixed manufacturing overhead and no additional fixed selling and administrative expenses. The customer is not in the company's regular selling territory, so there will be a $6.60 per unit shipping expense in addition to the regular variable selling and administrative expenses. Costs at Per Unit 148, 000 Units S 1,850, 000 2,220, 000 1,628,000 2,590, 000 2,220,000 2,368,000 $12,876, 000 Direct materials Direct labor $12.50 15.00 Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses 11.00 17.50 15.00 16.00 Totals $87.00 Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $78.30 per unit. Determine whether management should accept or reject the new business. Complete this question by entering your answers in the tabs below. Accept or Reject Net Income Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $78.30 per unit. Additional Combined Normal Volume Volume Total Costs and expenses:
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 7PB: Remarkable Enterprises requires four units of part A for every unit of Al that it produces....
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Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $78.30 per unit. Determine whether management should accept or reject the new business.
Transcribed Image Text:Goshford Company produces a single product and has capacity to produce 185,000 units per month. Costs to produce its current
sales of 148,000 units follow. The regular selling price of the product is $118 per unit. Management is approached by a new customer
who wants to purchase 37,000 units of the product for $78.30 per unit. If the order is accepted, there will be no additional fixed
manufacturing overhead and no additional fixed selling and administrative expenses. The customer is not in the company's regular
selling territory, so there will be a $6.60 per unit shipping expense in addition to the regular variable selling and administrative
expenses.
Costs at
Per Unit 148,000 Units
$12.50
$ 1,850, 000
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Variable selling and administrative expenses
Fixed selling and administrative expenses
15.00
2,220,000
1,628, 000
2,590,000
2,220,000
2,368, 000
$12,876, 000
11.00
17.50
15.00
16.00
Totals
$87.00
Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $78.30 per
unit. Determine whether management should accept or reject the new business.
Complete this question by entering your answers in the tabs below.
Accept or
Net Income
Reject
Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of
$78.30 per unit.
Combined
Total
Additional
Normal Volume
Volume
$
Costs and expenses:
0.
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