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Manal Elkhoshkhany
Manal Elkhoshkhany , Tutor
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AE7-2 (a,b) Gruner Company produces golf discs which it normally

Customer Question

AE7-2 (a,b)
Gruner Company produces golf discs which it normally sells to retailers for $7.16 each. The cost of manufacturing 22,400 golf discs is:

Materials $10,752
Labor 34,496
Variable overhead 21,952
Fixed overhead

45,696
Total

$112,896

Gruner also incurs 7% sales commission ($0.50) on each disc sold.

Travis Corporation offers Gruner $4.79 per disc for 4,400 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 $45,696 to $50,426 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. (If answer is zero, please enter 0. Do not leave any fields blank. If amount decreases the income, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Enter all amounts in columns "Reject Order" and "Accept Order" as positive amounts and subtract where necessary.)



Reject Order


Accept Order


Net Income Effect
Revenues $ $ $
Materials
Labor
Variable overhead
Fixed Overhead
Sales commission





Net income

$


$


$

Should Gruner accept the special order? Yes or No
Submitted: 5 years ago.
Category: Finance
Expert:  Manal Elkhoshkhany replied 5 years ago.

Hello

 

Please click here for the solution

 

If the above link does not work, please click on the following link:

 

http://www.mediafire.com/file/gn8v46g078u1jzr/Gruner.xls

 

 

P.S. If you like my services, please feel free to direct your future posts to me specifically by typing "For BusinessTutor" at the beginning of your post. Should you choose to do this, please try to allow me 48 hours before the deadline. If you need to meet me online for a timed assignment, please advise me of the date and time (EST) you want me to meet you here and I will. Please make sure you take the length (and number) of the questions into consideration when making your offer to avoid delays in providing solutions.

 

Thank you

Manal Elkhoshkhany and other Finance Specialists are ready to help you
Customer: replied 5 years ago.
Hi there, everything is perfect except the Net income Effect on section a. First line which is Revenues is correct, going down in section a everything is correct except Net Income Effect. Net Income at the bottom of a is correct, just need you to relook at Net Income Effect on Materials, Labor, Variable Overhead, Fixed Overhead, and Sales Commission. Let me know if you have any questions. Thank you
Expert:  Manal Elkhoshkhany replied 5 years ago.
The figure for the net income is calculated using the built-in sum formula in excel, it cannot be incorrect. Is that an excel sheet that you have?
Customer: replied 5 years ago.
No I am not using an excel spread sheet.
Expert:  Manal Elkhoshkhany replied 5 years ago.
What kind of application are you using to enter the answers?
Customer: replied 5 years ago.
It is called Wiley Plus, it is an application within my online course I am taking at Kaplan. The class is Managerial Accounting.They did away with using Excel documents, this is a new method for their accounting class.

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Expert:  Manal Elkhoshkhany replied 5 years ago.
you are probably entering the solution in a way that is different from the format required by that software. You said that all numbers are correct, try adding them yourself and you will come with the same figure for net income
Customer: replied 5 years ago.
OMG! LOL! The answers were correct but I didnt put a minus in front of it. I am so sorry, thank you again for your help with this, you have been very helpful. Please feel free to answer anything I have in the future.
Expert:  Manal Elkhoshkhany replied 5 years ago.
LOL, that is ok :) As i have advised you earlier, If you like my services, please feel free to direct your future posts to me specifically by typing "For BusinessTutor" at the beginning of your post. Should you choose to do this, please try to allow me 48 hours before the deadline. If you need to meet me online for a timed assignment, please advise me of the date and time (EST) you want me to meet you here and I will. Please make sure you take the length (and number) of the questions into consideration when making your offer to avoid delays in providing solutions.

 

Thank you

Customer: replied 5 years ago.
I definitely will. Thanks again.
Expert:  Manal Elkhoshkhany replied 5 years ago.
I will close this post. Please do not reply here so that it does not get reopened

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