Alpena Corporation manufactures smartphone and tablet cases. The following is the cost of each unit. Materials Labor Variable overhead Fixed overhead ($1,605,000 per year; 150,000 units per year) Total $7.85 3.45 1.45 10.70 $23.45 Decatur Devices has approached Alpena with an offer to buy 3,000 cases at a price of $18.80 each for its new specialty tablet designed for health care workers. The regular price of an Alpena case is $31.50. Alpena has the total capacity to produce 180,000 units without increasing its fixed overhead. Decatur Devices requires that each case use its branding, which requires a more expensive embossing step. This will result in an additional $3.35 per case labor cost. The material cost of of the Decatur case will be the same as for the current models. The Decatur order will also require a one-time rental of embossing equipment for $4,509. Required: a. Prepare a schedule to show the impact of filling the Decatur Devices order on Alpena's profits for the year. b. Would you recommend that Alpena accept the order? c. Considering only profit, determine the minimum quantity of cases in the special order that would make it profitable, assuming capacity is available.

Alpena Corporation manufactures smartphone and tablet cases. The following is the cost of each unit. Materials Labor Variable overhead Fixed overhead ($1,605,000 per year; 150,000 units per year) Total $7.85 3.45 1.45 10.70 $23.45 Decatur Devices has approached Alpena with an offer to buy 3,000 cases at a price of $18.80 each for its new specialty tablet designed for health care workers. The regular price of an Alpena case is $31.50. Alpena has the total capacity to produce 180,000 units without increasing its fixed overhead. Decatur Devices requires that each case use its branding, which requires a more expensive embossing step. This will result in an additional $3.35 per case labor cost. The material cost of of the Decatur case will be the same as for the current models. The Decatur order will also require a one-time rental of embossing equipment for $4,509. Required: a. Prepare a schedule to show the impact of filling the Decatur Devices order on Alpena's profits for the year. b. Would you recommend that Alpena accept the order? c. Considering only profit, determine the minimum quantity of cases in the special order that would make it profitable, assuming capacity is available.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 41E

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