FURY produces and sells skateboards. Its contribution margin income statement follows.
Contribution Margin Income Statement
For Year Ended December 31
Sales (90,000 units)
Variable costs
Direct materials
Direct labor
Variable overhead
Contribution margin
Fixed costs
Fixed overhead
Fixed general and administrative
Income
Per Unit
$ 60.00
30.00
9.00
10.00
11.00
3.00
2.00
$ 6.00
Annual Total
$ 5,400,000
2,700,000
810,000
900,000
990,000
270,000
180,000
$ 540,000
A potential customer offers to buy 11,000 units for $50.00 each. These sales would not affect the company's sales through its normal channels. Details of the special offer follow.
* Variable costs per unit would not change.
* Accepting the offer would require incremental fixed overhead costs of $11,000.
* Accepting the offer would require incremental fixed general and administrative costs of $16,500.
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Question
Should the company accept or reject the special offer?
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