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Homework answers / question archive / Jolly Ollie Orange Company sells citrus fruit from its website
Jolly Ollie Orange Company sells citrus fruit from its website. Protecting the fruit during shipping is critical to the company's success. Accordingly, Jolly Ollie fabricates its own shipping containers. Jolly Ollie ships 1,125,000 containers of fruit annually. Total costs to fabricate that many containers are as follows:
Volume: 1,125,000 containers
Direct materials $725,000
Direct labor $840,000
Variable overhead $824,000
Fixed overhead $772,000
Total $3,161,000
A major paper products company has offered to supply all of the containers that Jolly Ollie needs at a price of $2.00 per container.
What will be the effect on pretax income If Jolly Ollie accepts this offer? Show your work.
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