Answer:
Accept
Explanation:
The computation of the combined total net income is shown below:
Normal Volume Additional Volume Total
Sales $2,250,000 $180,000 $2,430,000
(15,000 × $12)
Costs and expenses:
Direct materials $300,000 $30,000 $330,000
Direct labor $600,000 $60,000 $660,000
Overhead $150,000 $22,500 $172,500
($150,000 × 15%)
Selling expenses $225,000 $225,000
Administrative expenses $385,500 $64,500 $450,000
Total costs and expenses $1,660,500 $177,000 $1,837,500
Incremental income (loss) from new business $589,500 $3,000 $592,500
Therefore, the company should accept the offer
