Moka Golf Club produces golf balls and sells them to its members at a price of $ 7 each. The cost to produce 20,000 golf balls is as follows: Materials​ $ 10,000 Labour​ $ 24,000 Variable Overheads $...


Moka Golf Club produces golf balls and sells them to its members at a price of $ 7 each. The cost to produce 20,000 golf balls is as follows:



                            Materials​                    $ 10,000


                            Labour​                             $ 24,000


                           Variable Overheads           $ 20,000


                           Fixed Overheads               $ 50,000


​                                                                  ----------------


                                                                    $ 104,000


                                                                    -----------------


The Club has received a request to supply 4,000 balls to a foreign entity at a price of $ 5.00 each. If Moka accepts the offer, its Fixed Overheads will increase by $ 5,000 because it will have to purchase additional equipment.



Required:



a) Prepare an incremental analysis for this Special Order.

b) Advise Moka as to whether they should accept the order.



Jun 01, 2022
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