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Exercise 7-2 Gruden Company produces golf discs which it normally sells to retailers for $6.95 each. The cost of manufacturing 22,700 golf discs is:...

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Exercise 7-2 Gruden Company produces golf discs which it normally sells to retailers for $6.95 each. The cost of manufacturing 22,700 golf discs is: Materials $11,123 Labor 33,142 Variable overhead 24,289 Fixed overhead 45,400 Total $113,954 Gruden also incurs 5% sales commission ($0.35) on each disc sold. McGee Corporation offers Gruden $5 per disc for 5,600 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 $45,400 to $50,228 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 e.g. -45 or parentheses e.g. (45).) Reject Order Accept Order Net Income Increase (Decrease) Revenues $ $ $ Materials Labor Variable overhead Fixed overhead Sales commissions Net income $ $ $
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Exercise 7-5 Schopp Inc. has been manufacturing its own shades for its table lamps. The company is currently operating at 100% of capacity, and variable manufacturing overhead is charged to production at the rate of 60% of direct labor cost. The direct materials and direct labor cost per unit to make the lamp shades are $3.90 and $5.00, respectively. Normal production is 28,000 table lamps per year. A supplier offers to make the lamp shades at a price of $13.30 per unit. If Schopp Inc. accepts the supplier’s offer, all variable manufacturing costs will be eliminated, but the $46,630 of fixed manufacturing overhead currently being charged to the lamp shades will have to be absorbed by other products. (a) Prepare the incremental analysis for the decision to make or buy the lamp shades. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Make Buy Net Income Increase (Decrease) Direct materials $ $ $ Direct labor Variable overhead costs Fixed manufacturing costs Purchase price Total annual cost $ $ $ Problem 7-1A 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 while operating at 80% of plant capacity and producing 118,900 units. Amount Sales $4,756,00 0 Cost of goods sold 3,762,684 Selling and administrative expenses 370,968 Net income $622,348 Fixed costs for the period were cost of goods sold $1,080,300, and selling and administrative expenses $185,484.
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Exercise 7-2 Gruden Company produces golf discs which it normally sells to retailers for $6.95 each. The cost of manufacturing 22,700 golf discs is: Materials Labor Variable overhead Fixed overhead...

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