Gruden Company produces golf discs which it normally sells to retailers for $6.8

Question

Gruden Company produces golf discs which it normally sells to retailers for $6.85 each. The cost of manufacturing 22,900 golf discs is: Gruden also incurs 7% sales commission ($0.48) on each disc sold. McGee Corporation offers Gruden $5 per disc for 5,300 discs. McGee would sell the discs under its own brand name in foreign markets not yet served by Gruden. If Gruden accepts the offer, its fixed overhead will increase from $46,029 to $51,190 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. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Should Gruden accept the special order?

Explanation / Answer

Gruden Company produces golf discs which it normally sells to retailers for $6.8

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