Question

Jones products manufacture and sells to wholesalers (due at midnight please help)

Jones Products manufactures and sells to wholesalers approximately 200,000 packages per year of underwater markers at $3.91 per package. Annual costs for the production and sale of this quantity are shown in the table. Direct naterials Direct labor Overhead Selling expenses Administrative expenses Total costs and expenses $256,000 64,000 192,000 80,000 645,000 A new wholesaler has offered to buy 33,000 packages for $3.49 each. These markers would be marketed under the wholesaler's s name and would not affect Jones Products' sales through its normal channels. A study of the costs of this additional business reveals the following: * Direct materials costs are 100% variable. Per unit direct labor costs for the additional units would be 50% higher than normal because their production would require overtime pay at 1% times the usual labor rate. 20% of the normal annual overhead costs are fixed at any production level from 15 to 30 00 units. The remaining 80% of the annual ovethead cost is variable with volume. Accepting the new business would involve no additional selling expenses. . Accepting the new business would increase administrative expenses by a $2,000 foxed amount Required: Complete the three-column comparative income statement that shows the following (Round your intermediate calculations and per unit cost answers to 3 decimals) 1. Annual operating income without the special order 2. Annual operating income received from the new business only < Prev 2 of 3 Next >

Answer 1

	PER UNITS AMOUNT		TOTAL
	NORMAL VOLUME	NEW BUSINESS	NORMAL VOLUME	NEW BUSINESS	COMBINED
Sales	3.91	3.49	200000	33000	233000
Sales IN VALUE			782000	115170	897170
Variabel costs
DIRECT MATERIALS	1.28	1.28	256000	42240	298240
DIRECT LABOUR	0.32	0.48	64000	15840	79840
OVERHEAD (80% VARIABLE)	0.77	0.77	153600	25344	178944
SELLING EXPENSES (No Extar expenses for New Business)	0.40	0.00	80000	0	80000
TOTAL VARIABLE COST	2.77	2.53	553600	83424	637024
CONTRIBUTION	1.14	0.96	228400	31746	260146
FIXED COSTS
OVERHEAD (20% fixed)	0.19	0.00	38400	0	38400
ADMISTRATIVE EXPENSES	0.27	0.06	53000	2000	55000
TOTAL FIXED COST	0.46	0.06	91400	2000	93400
					0
OPERATING INCOME	0.69	0.90	137000	29746	166746