What assumptions underlie the decision made

Assignment Help Accounting Basics

Reference no: EM13123421

Innova Company produces golf discs which it normally sells to retailers for $7
each. The cost of manufacturing 20,000 golf discs is:

Materials $ 10,000
Labor 30,000
Variable overhead 20,000
Fixed overhead 40,000
Total $100,000

Innova also incurs 5% sales commission ($0.35) on each disc sold. Mudd Corporation offers Innova $4.75 per disc for 5,000 discs. Mudd would sell the discs under its own brand name in foreign markets not yet served by Innova. If Innova 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 Innova accept the special order? Why or why not?
(c) What assumptions underlie the decision made in part (b)?

Reference no: EM13123421

Questions Cloud

What percentage of household incomes in state is in range : A standard deviation of about $9000. Approximately what percentage of household incomes in this state is between $27,000 to $63,000/year? Show all work as to how this is obtained.

Use the elements of the fraud triangle discussed : Use the elements of the fraud triangle discussed in the chapter to identify internal control risks that should have influenced KPMG's position.

Calculate the amount of heat liberated (in kj) : Calculate the amount of heat liberated (in kJ) from 383 g of mercury when it cools from 61.0°C to 11.0°C.

X-intercepts and vertex of parabola : Find the x-intercept(s) and the coordinates of the vertex for the parabola y=x^2+2x-35 . If there is more than one x -intercept, separate them with commas.

What assumptions underlie the decision made : Innova also incurs 5% sales commission ($0.35) on each disc sold. Mudd Corporation offers Innova $4.75 per disc for 5,000 discs. Mudd would sell the discs under its own brand name in foreign markets not yet served by Innova.

Conrad''s heart of darkness : 200 words needed. Conrad's Heart of Darkness is built around a journey, explain parallels to earlier journeys such as Marlow's or Gawain's

Graph of quadratic function : The graph of a quadratic function (a parabola) has x-intercepts -1 and 3 and a range consisting of numbers less than or equal to 4. Determine an expression for the function.

Find the chance that fewer deer have tick : A biologist estimates that 50% of deer in the region carry a certain type of tick. for a sample of 300 deer selected at random, what is the chance that 155 or fewer deer have this tick?

Calculate the amount of gift tax due : Calculate the amount of gift tax due (if any) on the 2008 gift, given Chris has made only one prior taxable gift of $1.5 million in 2005, at which he used the applicable unified credit. Please note the annual exclusion in 2008 was $12,000.

User Account

All Pages