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Gruden Company produces golf discs which it normally sells to retailers for $7 each. The...

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Accounting

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Gruden Company produces golf discs which it normally sells to retailers for $7 each. The cost of manufacturing 21,700 golf discs is: Materials Labor Variable overhead Fixed overhead $ 10,416 31.899 20,615 44.485 $107,415 Total Gruden also incurs 7% sales commission ($0.49) on each disc sold. McGee Corporation offers Gruden $4.90 per disc for 5,500 discs. McGee would sell the discs under its own brand name in foreign markets not yet served by Gruden. If Gruden accepts the offer, its fixed overhead will increase from $44,485 to $49,795 due to the purchase of a new imprinting machine. No sales commission will result from the special order. (a) Prepare an incremental analysis for the special order. (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses e.g. (45).) Reject Order Accept Order Net Income Increase (Decrease) Revenues 26632.80 26632.80 Materials 2630.40 2630.40 Labor 8055.60 8055.60 Variable overhead 5206 5206 Fixed overhead 5310 5310 Sales commissions Net income 5431 5431 $ 5431

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