Gruden Company produces golf discs which it normally sells to retailers for $6.83 each. The costof manufacturing 24,200 golf discs is:Materials$10,890Labor37,268Variable overhead24,200Fixed overhead48,884Total$121,242Gruden also incurs 4% sales commission ($0.27) on each disc sold.McGee Corporation offers Gruden $5 per disc for 4,700 discs. McGee would sell the discs underits own brand name in foreign markets not yet served by Gruden. If Gruden accepts the offer, itsfixed overhead will increase from $48,884 to $54,546 due to the purchase of a new imprintingmachine. No sales commission will result from the special order.Prepare an incremental analysis for the special order. (Enter negative amounts using either anegative sign preceding the number e.g. -45 or parentheses e.g. (45).)Reject orderRevenuesMaterialsLaborVariable overheadFixed OverheadSales commissionsNet IncomeAccept order$$Net IncomeIncrease (Decrease)$$$$Schopp Inc. has been manufacturing its own shades for its table lamps. The company is currentlyoperating at 100% of capacity, and variable manufacturing overhead is charged to production atthe rate of 60% of direct labor cost. The direct materials and direct labor cost per unit to makethe lamp shades are $3.62 and $4.70, respectively. Normal production is 30,200 table lamps peryear.A supplier offers to make the lamp shades at a price of $12.90 per unit. If Schopp Inc. accepts thesupplier’s offer, all variable manufacturing costs will be eliminated, but the $41,860 of fixedmanufacturing overhead currently being charged to the lamp shades will have to be absorbed byother products.Prepare the incremental analysis for the decision to make or buy the lamp shades. (Enter negativeamounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)MAKEDirect materials$Direct laborVariable overhead costsFixed manufacturing costsPurchase priceTotal annual cost$BUYNET INCOMEINCREASE (DECREASE)$$$$ShurShot Sports Inc. manufactures basketballs for the National Basketball Association (NBA).For the first 6 months of 2014, the company reported the following operating results whileoperating at 80% of plant capacity and producing 120,000 units.AMOUNT$ 4,680,0003,730,600540,000$ 409,000SALESCOST OF GOODS SOLDSELLING/ADMIN EXPENSESNET INCOMEFixed costs for the period were cost of goods sold $1,081,000, and selling and administrativeexpenses $270,000.In July, normally a slack manufacturing month, ShurShot Sports receives a special order for10,000 basketballs at $29 each from the Greek Basketball Association (GBA). Acceptance of theorder would increase variable selling and administrative expenses $0.51 per unit because ofshipping costs but would not increase fixed costs and expenses.Prepare an incremental analysis for the special order. (Round all per unit computations to 2decimal places, e.g. 15.25. Enter negative amounts using either a negative sign preceding thenumber e.g. -45 or parentheses e.g. (45).)REJECTORDERREVENUESCOST OF GOODS SOLDSELLING/ADMINEXPENSESNET INCOMEACCEPTORDER$$NET INCOMEINCREASE (DECREASE)$$$$
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