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Prepare and incremental analysis for the special order

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Reference no: EM131765162

Question - Gruner and Company produces golf disks which it normally sells to retailers for 7 dollars each. The cost of manufacturing 20.000 golf disks is.

Materials  $10,000

Labor $30,000

Variable Overhead $20,000

Fixed Overhead  40,000

Total $100,000

Gruner also incurs 5% sales commission ($.035) on each disc sold.

Travis Corporation offers Gruner $4.75 per disc for 5000 discs. Travis would sell the dsics under its own brand name in foreign markets not yet served by Gruner. If Gruner accepts the offer its fixed overhead will increase from $40,000 to $45,000 due to the purchase of a new imprinting machine. No sales commission will result from the special order.

A) Prepare and incremental analysis for the special order?

B) Should Gruner accept the special order why or why not?

Reference no: EM131765162

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