Pharoah Company produces golf discs which it normally sells to retailers for $6 each. The cost of manufacturing 25,000 golf discs is: Materials $9,000 Labor 27,000 Variable overhead 18,000 Fixed overhead 36,000 Total $90,000 Pharoah also incurs 5% sales commission ($0.30) on each disc sold. Rudd Corporation offers Pharoah $4.30 per disc for 2,700 discs. Rudd would sell the discs under its own brand name in foreign markets not served by Pharoah. If Pharoah accepts the offer, its fixed overhead will increase from $36,000 to $38,700 due to the purchase of a new imprinting machine. No sales commission will result from the special order. Prepare an incremental analysis for the special order. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any field blank. Enter O for the amounts.) Reject Order Accept Order Net Income Effect Revenues + $ $ 0 $
Pharoah Company produces golf discs which it normally sells to retailers for $6 each. The cost of manufacturing 25,000 golf discs is: Materials $9,000 Labor 27,000 Variable overhead 18,000 Fixed overhead 36,000 Total $90,000 Pharoah also incurs 5% sales commission ($0.30) on each disc sold. Rudd Corporation offers Pharoah $4.30 per disc for 2,700 discs. Rudd would sell the discs under its own brand name in foreign markets not served by Pharoah. If Pharoah accepts the offer, its fixed overhead will increase from $36,000 to $38,700 due to the purchase of a new imprinting machine. No sales commission will result from the special order. Prepare an incremental analysis for the special order. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any field blank. Enter O for the amounts.) Reject Order Accept Order Net Income Effect Revenues + $ $ 0 $
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 3PA: Marcotti Cupcakes bakes and sells a basic cupcake for $1.25. The cost of producing 600,000 cupcakes...
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