Peters Company produces golf discs which it normally sells to retailers for $8 each. The cost of manufacturing 13,100 golf discs is:
| Materials |
|
$ 7,860 |
| Labor |
|
10,480 |
| Variable overhead |
|
19,650 |
| Fixed overhead |
|
37,990 |
| Total |
|
$75,980 |
Peters also incurs 6% sales commission ($0.48) on each disc sold.
Wade Corporation offers Peters $6 per disc for 5,700 discs. Wade would sell the discs under its own brand name in foreign markets not yet served by Peters. If Peters accepts the offer, its fixed overhead will increase from $37,990 to $44,480 due to the purchase of a new imprinting machine. No sales commission will result from the special order.
Prepare an incremental analysis for the special order. (If an amount reduces the net income then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000). Enter all other amounts as positive and subtract where necessary.)