What would be the effect on Concord’s income if the special order were accepted? Concord’s income will increase by $ ____________
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Concord Company is a leading manufacturer of sunglasses. One of Concord’s products protects the eyes from ultraviolet rays. An upscale sporting goods store has contacted Concord about purchasing 17,900 pairs of these sunglasses. Concord’s unit manufacturing cost, based on a full capacity of 103,000 units, is as follows:
Direct materials | $6 | |
Direct labor | 5 | |
Manufacturing overhead (60% fixed) | 20 | |
Total |
$31 |
Concord also incurs selling and administrative expenses of $78,640 plus $3 per pair for sales commissions. The company has plenty of excess manufacturing capacity to use in manufacturing the sunglasses. Concord’s normal price for these sunglasses is $40 per pair. The sporting goods store has offered to pay $35 per pair. Since the special order was initiated by the sporting goods store, no sales commission will be paid.
What would be the effect on Concord’s income if the special order were accepted?
Concord’s income will
increase by $ ____________
|
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- Flounder Company is a leading manufacturer of sunglasses. One of Flounder's products protects the eyes from ultraviolet rays. An upscale sporting goods store has contacted Flounder about purchasing 28,700 pairs of these sunglasses. Flounder's unit manufacturing cost, based on a full capacity of 242,000 units, is as follows: Direct materials Direct labor Manufacturing overhead (75% fixed) Total manufacturing costs $7 5 25 $37 Flounder also incurs selling and administrative expenses of $74,200 plus $3 per pair for sales commissions. The company has plenty of excess manufacturing capacity to use in manufacturing the sunglasses. Flounder's normal price for these sunglasses is $42 per pair. The sporting goods store has offered to pay $36 per pair. Since the special order was initiated by the sporting goods store, no sales commission will be paid. What would be the effect on Flounder's income if the special order were accepted? Flounder's income will increase ✓ by $ 538125Martinez Products manufactures a line of desk chairs. Martinez's production operations are divided into two departments — Department 1 and Department 2. The company uses a process costing system. Martinez incurred the following costs during the year to produce 25,700 chairs: Department 1 $863,500 Department 2 $287,000 If Martinez sells 22,600 chairs during the year, what will be the cost per chair produced? (Round your answer to two decimal places.) A. $38.21 B. $44.77 C. $33.60 D. $50.91Martinez Products manufactures a line of desk chairs. Martinez's production operations are divided into two departments — Department 1 and Department 2. The company uses a process costing system. Martinez incurred the following costs during the year to produce 26,300 chairs: Department 1 $860,500 Department 2 $295,000 If Martinez sells 22,700 chairs during the year, what will be the cost per chair produced? (Round your answer to two decimal places.) A. $37.91 B. $50.90 C. $43.94 D. 32.72
- MTI makes three types of lawn tractors: M3100, M4100, and M6100. In the past, it allocated overhead to products using machine-hours. Last year, the company produced 10,000 units of M3100, 17,500 units of M4100, and 10,000 units of M6100 and had the following revenues and costs: MTI Income Statement M3100 M4100 M6100 Total Sales revenue Direct costs $9,000,000 $15,000,000 $13,500,000 $37,500,000 3,000,000 600,000 Direct materials. 4,500,000 900,000 3,300,000 1,800,000 10,800,000 3,300,000 Direct labor Variable overhead Setting up machines Processing sales orders.. Warehousing. Operating machines Shipping Contribution margin. Plant administration 2,400,000 1,800,000 2,400,000 1,200,000 900,000 $14,700,000 6,000,000 Gross profit.. $ 8,700,000 MTI's controller has heard about activity-based costing and puts together an employee team to recommend cost allocation bases. The employee team recommends the following: Activity Cost Driver M3100 M4100 M6100 Setting up machines . Processing sales…CWB Inc. produces stuffed bunnies. The company normally produces and sells 78,000 stuffedbunnies each year at a selling price of $50 per unit. The company's unit costs at this level ofactivity are given below: Direct materials $9.30Direct labor 8.00Variable manufacturing overhead 2.00Fixed manufacturing overhead 6.00 ($468,000 total)Variable selling expenses 1.50Fixed selling expenses 6.00 ($468,000 total)Total cost per unit $32.80 The company has 500 completed stuffed bunnies on hand that have someirregularities and are therefore considered to be "seconds." Due to the irregularities, it will beimpossible to sell these units at the normal price through regular distribution channels. Whatunit cost figure is relevant for setting a minimum selling price? Briefly explain why. How to do it and what does unit cost figure mean?Ring Company makes telephones. Currently, Ring makes all components of the telephones in-house. An outside company has offered to supply one component, part number X76, for $12 each. Ring uses 22,000 of these components per year. Costs of X76 are as follows: Direct materials $3.00 Direct labor $1.50 Variable overhead $2.75 Fixed overhead $5.00 Refer to Figure 13-7. Assume that all of the fixed overhead is allocated and cannot be avoided. Should Ring purchase the part from the outside supplier? Yes, income will increase by $104,500. No, income will decrease by $104,500. Yes, income will increase by $78,500. Yes, income will increase by $95,500. Yes, income will increase by $137,500.
- Jordan electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly costs of producing 9,100 containers follow Unit-level material $6,000 Unit-level labor $6,700 unit-level overhead $3,300 product-level costs* $11,700 Allocated facility-level costs $26,500 *one-third of these costs can be avoided by purchasing the containers. Russo container company has offered to sell comparable containers to Jordan for $2.80 each. Required a) Calculate the total relevant cost should Jordan continue to make the containers. b) Jordan could lease the space it currently uses in the manufacturing process if leasing would produce $11,700 per month, and calculate the total avoidable costs. Should Jordan continue to make the containers? a) Total relevant cost should Jordan continue to make the containers? Total avoidable cost Should Jordan continue to make the containers?Anglen Company manufactures and sells trophies for winners of athletic and other events. Its manufacturing plant has the capacity to produce 18,500 trophies each month; current monthly production is 15,000.00 trophies. The company normally charges $105.50 per trophy. Cost data for the current level of production are shown below: Variable costs: Direct materials $ 463,300 Direct labor $ 328,300 Selling and administrative $ 17,840 Fixed costs: Manufacturing $ 407,390 Selling and administrative $ 75,880 The company has just received a special one-time order for 925 trophies at $49.00 each. For this particular order, no variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs. Assume that direct labor is a variable cost. Required: Should the company accept this special order? Why? Accepting the order has a financial ________ of _________. Therefore the company _______ accept the order.Adams Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,100 containers follows. Unit-level materials $ 5,400 Unit-level labor 6,400 Unit-level overhead 3,900 Product-level costs* 10,500 Allocated facility-level costs 28,200 *One-third of these costs can be avoided by purchasing the containers.Russo Container Company has offered to sell comparable containers to Adams for $2.80 each.Required Calculate the total relevant cost. Should Adams continue to make the containers? Adams could lease the space it currently uses in the manufacturing process. If leasing would produce $12,500 per month, calculate the total avoidable costs. Should Adams continue to make the containers?
- Blossom Inc. manufactures two electronic products, widgets and gadgets, and has a capacity of 2,700 machine hours. Prices and costs for each product are as follows: Widget Gadget Selling price per unit $267 $347 Variable costs per unit Direct materials 34 52 Other direct costs 14 29 Variable Manufacturing overhead costs* 47 61 * Variable manufacturing overhead costs are applied at a rate of $57 per machine hour.Steering Industries, a potential client, has offered $266 per unit to Blossom for 266 special units. These 266 units would incur the following production costs and time: Direct materials $10,234 Other direct costs $4,700 Machine hours 242 Assume that Blossom is actually operating at 95% of full capacity. Calculate what the opportunity cost would be if Steering’s special order were accepted. Opportunity cost $enter the opportunity cost in dollars…Blossom Inc. manufactures two electronic products, widgets and gadgets, and has a capacity of 2,700 machine hours. Prices and costs for each product are as follows: Widget Gadget Selling price per unit $267 $347 Variable costs per unit Direct materials 34 52 Other direct costs 14 29 Variable Manufacturing overhead costs* 47 61 * Variable manufacturing overhead costs are applied at a rate of $57 per machine hour.Steering Industries, a potential client, has offered $266 per unit to Blossom for 266 special units. These 266 units would incur the following production costs and time: Direct materials $10,234 Other direct costs $4,700 Machine hours 242 Assume that Blossom has enough excess capacity to produce the special order. Calculate what the total contribution would be if the special order from Steering were accepted. Total contribution margin $enter the total contribution margin…Calla Company produces skateboards that sell for $55 per unit. The company currently has the capacity to produce 95,000 skateboards per year, but is selling 81,800 skateboards per year. Annual costs for 81,800 skateboards follow. Direct materials $ 948,880 Direct labor 597,140 Overhead 952,000 Selling expenses 542,000 Administrative expenses 480,000 Total costs and expenses $ 3,520,020 A new retail store has offered to buy 13,200 of its skateboards for $50 per unit. The store is in a different market from Calla's regular customers and would not affect regular sales. A study of its costs in anticipation of this additional business reveals the following: Direct materials and direct labor are 100% variable. 40 percent of overhead is fixed at any production level from 81,800 units to 95,000 units; the remaining 60% of annual overhead costs are variable with respect to volume. Selling expenses are 60% variable with respect to number of…