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    Incremental analysis for special-order decision

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    Gruner Company produces golf discs which it normally sells to retailers for $7 each. The cost of manufacturing 20,000 golf disc is:
    Materials $10,000
    Labor 30,000
    Variable overhead 20,000
    Fixed overhead 40,000

    Total $100,000

    Gruner also incurs 5% sales commission ($0.35) on each disc sold.

    Travis Corporation offers Gruner $4.75 per disc for 5,000 discs. Travis would sell the discs 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.

    Required
    1. Prepare an incremental analysis for the special order.
    2. Should Gruner accept the special order? Why or why not?

    The template is attached.

    © BrainMass Inc. brainmass.com June 4, 2020, 12:16 am ad1c9bdddf
    https://brainmass.com/business/accounting/incremental-analysis-for-special-order-decision-328666

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