Prepare an incremental analysis schedule

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Question - RSW Company manufactures 17,000 units of wheel sets for use in annual production. Costs are as follows:

Item

Cost

Direct material

$45,000

Direct labor

60,100

Variable manufacturing overhead

62,000

Fixed manufacturing overhead

73,000

Rayco Company has offered to sell RSW 17,000 units of wheel sets for $16 per unit. If RSW accepts the offer, some of the facilities presently used to manufacturing wheel sets could be rented to a third party at an annual rental of $32,500. In addition, $45,500 of fixed overhead would be totally eliminated.

Requirements: Prepare an incremental analysis schedule to demonstrate if RSW should accept Rayco's offer.

Reference no: EM131566740

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