Contribution Margin Income StatementFor Year Ended December 31Sales (400,000 units)Variable costsDirect materialsDirect laborVariable overheadContribution marginFixed costsFixed overheadFixed general and administrativeIncomePer Unit$ 6.00Required 1 Required 21.440.360.603.600.200.15$ 3.25Required:1. Compute income from the special offer.2. Should the company accept or reject the special offer?Contribution marginA potential customer offers to buy 50,000 units for $3.20 each. These sales would not affect the company's sales through its normalchannels. Details about the special offer follow.• Direct materials cost per unit and variable overhead cost per unit would not change.●Direct labor cost per unit would be $0.54 because the offer would require overtime pay.• Accepting the offer would require incremental fixed general and administrative costs of $5,000.Accepting the offer would require no incremental fixed overhead costs.Fixed overheadFixed general and administrativeIncome (loss)Annual Total$ 2,400,000Complete this question by entering your answers in the tabs below.576,000144,000240,0001,440,000$80,00060,000$ 1,300,000Compute income from the special offer. (Round your "Per Unit" answers to 2 decimal places.)Special Offer AnalysisPer Unit0.000.00 $Total00

To decide if a special order is to be accepted or rejected , the incremental cost on the special…

me Statement Per Unit $ 6.00 1.44 0.36 0.60 3.60 0.20 0.15 $ 3.25 Annual Total $ 2,400,000 576,000 144,000 240,000 1,440,000 80,000 60,000 $ 1,300,000 s for $3.20 each. These sales would not affect the co

me Statement Per Unit $ 6.00 1.44 0.36 0.60 3.60 0.20 0.15 $ 3.25 Annual Total $ 2,400,000 576,000 144,000 240,000 1,440,000 80,000 60,000 $ 1,300,000 s for $3.20 each. These sales would not affect the co

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 17E: Variable costing income statement for a service company East Coast Railroad Company transports...

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Question

Contribution Margin Income Statement
For Year Ended December 31
Sales (400,000 units)
Variable costs
Direct materials
Direct labor
Variable overhead
Contribution margin
Fixed costs
Fixed overhead
Fixed general and administrative
Income
Per Unit
$ 6.00
Required 1 Required 2
1.44
0.36
0.60
3.60
0.20
0.15
$ 3.25
Required:
1. Compute income from the special offer.
2. Should the company accept or reject the special offer?
Contribution margin
A potential customer offers to buy 50,000 units for $3.20 each. These sales would not affect the company's sales through its normal
channels. Details about the special offer follow.
• Direct materials cost per unit and variable overhead cost per unit would not change.
●
Direct labor cost per unit would be $0.54 because the offer would require overtime pay.
• Accepting the offer would require incremental fixed general and administrative costs of $5,000.
Accepting the offer would require no incremental fixed overhead costs.
Fixed overhead
Fixed general and administrative
Income (loss)
Annual Total
$ 2,400,000
Complete this question by entering your answers in the tabs below.
576,000
144,000
240,000
1,440,000
$
80,000
60,000
$ 1,300,000
Compute income from the special offer. (Round your "Per Unit" answers to 2 decimal places.)
Special Offer Analysis
Per Unit
0.00
0.00 $
Total
0
0

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