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-   -   Henson Company produces golf discs which it normally sells to retailers for $7 each. (https://www.askmehelpdesk.com/showthread.php?t=473525)

  • May 25, 2010, 10:55 PM
    henri44
    Henson Company produces golf discs which it normally sells to retailers for $7 each.
    Henson 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 24,000
    Variable overhead 20,000
    Fixed overhead 50,000
    Total $104,000
    Henson also incurs 5% sales commission ($0.35) on each disc sold.
    Wood Corporation offers Henson $4.75 per disc for 4,000 discs.Wood would sell the discs
    under its own brand name in foreign markets not yet served by Henson. If Henson 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 Henson accept the special order? Why or why not?
    (c) What assumptions underlie the decision made in part (b)?
    E7-2B
  • May 25, 2010, 11:08 PM
    Clough
    Quote:

    Originally Posted by henri44 View Post
    Henson 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 24,000
    Variable overhead 20,000
    Fixed overhead 50,000
    Total $104,000
    Henson also incurs 5% sales commission ($0.35) on each disc sold.
    Wood Corporation offers Henson $4.75 per disc for 4,000 discs.Wood would sell the discs
    under its own brand name in foreign markets not yet served by Henson. If Henson 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 Henson accept the special order? Why or why not?
    (c) What assumptions underlie the decision made in part (b)?
    E7-2B

    Hi, henri44!

    Are you looking for direct answers to the questions, or for someone to come along and teach you how to come up with the correct answers yourself, please?

    If the former is true, please click on the following link to read the announcement there.

    https://www.askmehelpdesk.com/financ...-b-u-font.html

    Thanks!

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