Pardo Company produces a single product and has capacity to produce 120,000 units per month. Costs to produce its current monthly sales of 80,000 units follow. The normal selling price of the product is $100 per unit. A new customer offers to purchase 20,000 units for $75 per unit. If the special offer is accepted, there will be no additional fixed overhead and no additional fixed general and administrative costs. The special offer would not affect its normal sales. Direct materials Direct labor Variable overhead Fixed overhead Fixed general and administrative Totals Per Unit $ 12.50 29.00 10.00 17.50 13.00 Costs at 80,000 Units $ 1,000,000 2,320,000 800,000 1,400,000 1,040,000 $ 6,560,000 $ 82.00(a) Compute the income from the special offer.(b) Should the company accept the special offer? Complete this question by entering your answers in the tabs below. Complete this question by entering your answers in the tabs below.

Before any costs are subtracted, the sales revenue is the income from goods and services. It is usually calculated over a specific time frame, such as a fiscal year or quarter. Net sales are the operating revenues obtained by a business from the sale of its goods or provision of its services in bookkeeping, accounting, and financial accounting. They are directly recorded on the income statement as the sales or Net sales and are also referred to as revenue.

Given:

Special offer Per unit Total

Sales revenue (20,000 × $75) $75 $1,500,000

Variable costs:

Direct material $12.50 $250,000

Direct labor $29.00 $580,000

Variable overhead $10.00 $200,000

Contribution margin $23.50 $470,000

Fixed Costs:

Fixed overhead $0.00 $0.00

Fixed general & Administration cost $0.00 $0.00

Net income $23.50 $470,000

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