Harrison Company produces golf discs which it normally sells to retailers for $7 each. The...
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Harrison Company produces golf discs which it normally sells to retailers for $7 each. The cost of manufacturing 20,000 golf discs is: Materials Labor Variable overhead Fixed overhead $ 10,000 24,000 20,000 50,000 $104,000 Total Hamson also incurs 5% sales commission ($0.35) on each disc sold. Towson Corporation offers Harrison $5.00 per disc for 4,000 discs. Towson would sell the discs under its own brand name in foreign markets not yet served by Harrison. If Harrison accepts the offer, its fixed overhead will increase from $50,000 to $55,000 due to the purchase of a new imprinting machine. No sales commission will result from the special order Instructions (a) Prepare an incremental analysis for the special order (b) Should Harrison accept the special order? Why or why not? (c) What assumptions underlie the decision made in part (b)2
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