Accepting Business at a Special Price Power Serve Company expects to operate at 82% of productive capacity during May. The total manufacturing costs for May for the production of 26,240 batteries are budgeted as follows: Direct materials $285,500 Direct labor 105,000 Variable factory overhead 29,340 Fixed factory overhead 59,000 Total manufacturing costs $478,840 The company has an opportunity to submit a bid for 2.000 batteries to be delivered by May 31 to a government

Accepting Business at a Special Price Power Serve Company expects to operate at 82% of productive capacity during May. The total manufacturing costs for May for the production of 26,240 batteries are budgeted as follows: Direct materials $285,500 Direct labor 105,000 Variable factory overhead 29,340 Fixed factory overhead 59,000 Total manufacturing costs $478,840 The company has an opportunity to submit a bid for 2.000 batteries to be delivered by May 31 to a government

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 14E: Accepting business at a special price Box Elder Power Company expects to operate at 85% of...

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Eastman, Inc., manufactures and sells three products: R, S, and T. In January, Eastman, Inc., budgeted sales of the following. At the end of the year, actual sales revenue for Product R and Product S was 3,075,000 and 3,254,000, respectively. The actual price charged for Product R was 25 and for Product S was 20. Only 10 was charged for Product T to encourage more consumers to buy it, and actual sales revenue equaled 540,000 for this product. Required: 1. Calculate the sales price and sales volume variances for each of the three products based on the original budget. 2. Suppose that Product T is a new product just introduced during the year. What pricing strategy is Eastman, Inc., following for this product?
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