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Feist Co. expects to sell 200,000 units of its product in the next period with the following results.

Sales (200,000 units)		$	3,000,000
Costs and expenses
Direct materials			( 400,000 )
Direct labor			( 800,000 )
Overhead			( 200,000 )
Selling expenses			( 300,000 )
Administrative expenses			( 514,000 )
Total costs and expenses			( 2,214,000 )
Net profit		$	786,000

The company has an opportunity to sell 20,000 additional units at $13 per unit. The additional sales would not affect its current expected sales. Direct materials and labor costs per unit would be the same for the additional units as they are for the regular units. However, the additional volume would create the following incremental costs: (1) total overhead would increase by 16% and (2) administrative expenses would increase by $86,000.

Calculate the combined total net profit if the company accepts the offer to sell additional units at the reduced price of $13 per unit. (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values. Omit the "$" sign in your response.)

	Normal Volume	Additional Volume*	Combined Total
(Click to select)CashDirect materialsSalesDirect laborOverhead	$	$	$
Costs and expenses
(Click to select)Direct materialsSalesDepreciation expenseCashRent expense
(Click to select)SalesRent expenseCashDepreciation expenseDirect labor
(Click to select)Depreciation expenseRent expenseOverheadCashSales
(Click to select)Selling expensesCashRent expenseSalesDepreciation expense
(Click to select)Administrative expensesCashRent expenseSalesDepreciation expense
Total costs and expenses	$	$	$
(Click to select)Net profitNet loss	$	$	$

Should the company accept or reject the offer?

The company should accept the offer The company should reject the offer

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