Bonita Company produces golf discs which it normally sells to retailers for $7 each. The cost of manufacturing 23,600 golf discs is: Materials $ 12,744 Labor 36,344 Variable overhead 24,308 Fixed overhead 48,144 Total $121,540 Bonita also incurs 7% sales commission ($0.49) on each disc sold. McGee Corporation offers Gruden $4.90 per disc for 5,100 discs. McGee would sell the discs under its own brand name in foreign markets not yet served by Bonita. If Bonita accepts the offer, its fixed overhead will increase from $48,144 to $52,714 due to the purchase of a new imprinting machine. No sales commission will result from 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).) Reject Order Accept Order Net Income Increase (Decrease) Revenues $ $ $ Materials Labor Variable overhead Fixed overhead Sales commissions Net income $ $ $
(b) Should Bonita accept the special order? Bonita should the special order .
