Gruden company produces golf discs which it normally sells

Reference no: EM13581782

Gruden Company produces golf discs which it normally sells to retailers for $6.95 each. The cost of manufacturing 22,400 golf discs is: Materials $12,320 Labor 33,824 Variable overhead 22,848 Fixed overhead 44,800 Total $113,792 Gruden also incurs 5% sales commission ($0.35) on each disc sold. McGee Corporation offers Gruden $5 per disc for 5,200 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 $44,800 to $49,853 due to the purchase of a new imprinting machine. No sales commission will result from the special order.

Reference no: EM13581782

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