Gruner also incurs 7 sales commission 048 on each disc
Course:- Accounting Basics
Reference No.:- EM13601444

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Gruner Company produces golf discs which it normally sells to retailers for $6.89 each. The cost of manufacturing 17,300 golf discs is:

  • Materials $8,996
  • Labor 24,393
  • Variable overhead 18,857
  • Fixed overhead 33,908
  • Total $86,154

Gruner also incurs 7% sales commission ($0.48) on each disc sold.Travis Corporation offers Gruner $4.82 per disc for 4,700 discs. Travis would sell the discs under its own brand name in foreign markets not yet served by Gruner. If Gruner accepts the offer, its fixed overhead will increase from $33,908 to $38,718 due to the purchase of a new imprinting machine. No sales commission will result from the special order.

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