Transcribed Image Text: Complete this question by entering your answers in the tabs below

Transcribed Image Text: Complete this question by entering your answers in the tabs below.
Аcсept 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 $12
per unit.
Additional
Combined
Normal Volume
Volume
Total
Costs and expenses:
Total costs and expenses
Incremental income (loss) from new business
< Net Income Accept or Reject > Transcribed Image Text: Farrow Co. expects to sell 300,000 units of its product in the next period with the following results.
Sales (300,000 units)
Costs and expenses
$4,500,000
600,000
1,200,000
300, 000
450,000
771,000
Direct materials
Direct labor
Overhead
Selling expenses
Administrative expenses
Total costs and expenses
3,321,000
$1,179,000
Net income
The company has an opportunity to sell 30,000 additional units at $12 per unit. The additional sales would not affect its current
expected sales. Direct materials and labor costs per unit would be the same for the additional units as they are for the regular units.
However, the additional volume would create the following incremental costs: (1) total overhead would increase by 16% and (2)
administrative expenses would increase by $129,000.
Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $12 per unit.
Should the company accept or reject the offer?

-25-


Buy plagiarism free, original and professional custom paper online now at a cheaper price. Submit your order proudly with us



Essay Hope