just need the variable selling and admin. exp for the middle section Goshford Co
ID: 2563453 • Letter: J
Question
just need the variable selling and admin. exp for the middle section
Goshford Company produces a single product and has capacity to produce 160,000 units per month. Costs to produce its current sales of 128,000 units follow. The regular selling price of the product is $140 per unit. Management is approached by a new customer who wants to purchase 32,000 units of the product for 105.00 per unit. If the order is accepted, there will be no additional fixed manufacturing overhead, and no additional fixed selling and administrative expenses. The customer is not in the company's regular selling territory, so there will be a $5 per unit shipping expense in addition to the regular variable selling and administrative expenses Costs at 128,000 Units Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses Per Unit $ 12.50 15.00 11.00 17.50 16.00 15.00 $ 1,600,000 1,920,000 1,408,000 2,240,000 2,048,000 1,920,000 Totals $ 87.00 S 11,136,000 Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $105.0 per unit. Normal Volume Additional Combined Total Volume ales S 17,920,000 S 3,360,000 21,280,000 Costs and expenses 1,600,000 1,920,000 1,408,000 2,240,000 2,048,000 1,920,000 2,000,000 2,400,000 1,760,000 2,240,000 2,048,000 1,920,000 400,000 480,000 352,000 Direct materials Direct labor Variable overhead Fixed overhead Variable selling and admin. exp Fixed selling and admin. exp Total costs and expenses Net income (loss) 11,136,000 1,232,000 12,368,000 S 6,784,000 2,128,000 $ 8,912,000Explanation / Answer
Variable selling and admin expenses = 32000*(16+5)= 672000
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