Answer and Explanation:
The preparation of the incremental analysis is shown below:
Incremental analysis
Particulars Normal Additional Total
Revenue $4,500,000 $360,000 $4,860,000
(30,000 units × $12)
Less: expenses
Material $600,000 $60,000 $660,000
($600,000 ÷ 300,000 × 30,000 units)
Labor $1,200,000 $120,000 $1,320,000
($1,200,000 ÷ 300,000 × 30,000 units)
Overhead $300,000 $45,000 $345,000
($300,000 × 15%)
Selling expenses $450,000 $0 $450,000
Admin expenses $771,000 $129,000 $900,000
Net income $1,179,000 $6,000 $1,185,000
Since the net income is increased by $6,000 so the company should accept the offer
