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Pharoah Company produces golf discs which it normally sells to retailers for $7 each. The...

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Accounting

Pharoah Company produces golf discs which it normally sells to retailers for $7 each. The cost of manufacturing 22,200 golf discs is: Materials Labor Variable overhead Fixed overhead Total Pharoah also incurs 5% sales commission ($0.35) on each disc sold. McGee Corporation offers Pharoah $4.90 per disc for 4,700 discs. McGee would sell the discs under its own brand name in foreign markets not yet served by Pharoah. If Pharoah accepts the offer, it will incur a one-time fixed cost of $5,660 due to the rental of an imprinting machine. No sales commission will result from the special order. Assume there is sufficient capacity to accommodate the special order. (a) Prepare an incremental analysis for the special order. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Revenues Materials Labor Variable overhead $ 11,100 33,966 24,198 45,066 $114,330 Cost of equipment rental Net income $ $ Reject Order 1 1 1 +A $ $ Accept Order 5660 1 $ Net Income Increase (Decrease) 5660 1
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