Homework Help is Here – Start Your Trial Now!
Business
Accounting
Homestead Jeans Co. has an annual plant capacity of 65,000 units, and current production is 45,000 units. Monthly fixed costs are $54,000, and variable costs are $29 per unit. The present selling price is $42 per unit. On November 12 of the current year, the company received an offer from Dawkins Company for 18,000 units of the product at $32 each. Dawkins Company will market the units in a foreign country under its own brand name. The additional business is not expected to affect the domestic selling price or quantity of sales of Homestead Jeans Co. a. Prepare a differential analysis dated November 12 on whether to reject (Alternative 1) or accept (Alternative 2) the Dawkins order. If an amount is zero, enter "0". If required, use a minus sign to indicate a loss. Differential Analysis Reject Order (Alt. 1) or Accept Order (Alt. 2) November 12 Ассept Differential Reject Order Order Effects (Alternative 1) (Alternative 2) (Alternative 2) Revenues 576.000 576,000 Costs:

Homestead Jeans Co. has an annual plant capacity of 65,000 units, and current production is 45,000 units. Monthly fixed costs are $54,000, and variable costs are $29 per unit. The present selling price is $42 per unit. On November 12 of the current year, the company received an offer from Dawkins Company for 18,000 units of the product at $32 each. Dawkins Company will market the units in a foreign country under its own brand name. The additional business is not expected to affect the domestic selling price or quantity of sales of Homestead Jeans Co. a. Prepare a differential analysis dated November 12 on whether to reject (Alternative 1) or accept (Alternative 2) the Dawkins order. If an amount is zero, enter "0". If required, use a minus sign to indicate a loss. Differential Analysis Reject Order (Alt. 1) or Accept Order (Alt. 2) November 12 Ассept Differential Reject Order Order Effects (Alternative 1) (Alternative 2) (Alternative 2) Revenues 576.000 576,000 Costs:

Managerial Accounting
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 13E
See similar textbooks
icon
Related questions
Question
Feedback V Check My Work a. Subtract the additional costs from the additional revenues for accepting the order. b. Having unused capacity available is relevant - v to this decision. The differential revenue is more -v than the differential cost. Thus, accepting this additional business will result in a net profit c. What is the minimum price per unit that would produce a positive contribution margin? Round your answer to two decimal places. 0.91 x Feedback V Check My Work b. What is the effect on capacity? What is the net gain/loss? c. What are the variable costs per unit? Feedback
Transcribed Image Text:Feedback V Check My Work a. Subtract the additional costs from the additional revenues for accepting the order. b. Having unused capacity available is relevant - v to this decision. The differential revenue is more -v than the differential cost. Thus, accepting this additional business will result in a net profit c. What is the minimum price per unit that would produce a positive contribution margin? Round your answer to two decimal places. 0.91 x Feedback V Check My Work b. What is the effect on capacity? What is the net gain/loss? c. What are the variable costs per unit? Feedback
Decision on Accepting Additional Business Homestead Jeans Co. has an annual plant capacity of 65,000 units, and current production is 45,000 units. Monthly fixed costs are $54,000, and variable costs are $29 per unit. The present selling price is $42 per unit. On November 12 of the current year, the company received an offer from Dawkins Company for 18,000 units of the product at $32 each. Dawkins Company will market the units in a foreign country under its own brand name. The additional business is not expected to affect the domestic selling price or quantity of sales of Homestead Jeans Co. a. Prepare a differential analysis dated November 12 on whether to reject (Alternative 1) or accept (Alternative 2) the Dawkins order. If an amount is zero, enter "0". If required, use a minus sign to indicate a loss. Differential Analysis Reject Order (Alt. 1) or Accept Order (Alt. 2) November 12 Аcсept Order Reject Differential Order Effects (Alternative 1) (Alternative 2) (Alternative 2) Revenues 576,000 576,000 Costs: Variable manufacturing costs 522,000 -522,000 Profit (Loss) 54,000 54,000
Transcribed Image Text:Decision on Accepting Additional Business Homestead Jeans Co. has an annual plant capacity of 65,000 units, and current production is 45,000 units. Monthly fixed costs are $54,000, and variable costs are $29 per unit. The present selling price is $42 per unit. On November 12 of the current year, the company received an offer from Dawkins Company for 18,000 units of the product at $32 each. Dawkins Company will market the units in a foreign country under its own brand name. The additional business is not expected to affect the domestic selling price or quantity of sales of Homestead Jeans Co. a. Prepare a differential analysis dated November 12 on whether to reject (Alternative 1) or accept (Alternative 2) the Dawkins order. If an amount is zero, enter "0". If required, use a minus sign to indicate a loss. Differential Analysis Reject Order (Alt. 1) or Accept Order (Alt. 2) November 12 Аcсept Order Reject Differential Order Effects (Alternative 1) (Alternative 2) (Alternative 2) Revenues 576,000 576,000 Costs: Variable manufacturing costs 522,000 -522,000 Profit (Loss) 54,000 54,000
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Special order decisions
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Managerial Accounting
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Principles of Accounting Volume 2
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Cornerstones of Cost Management (Cornerstones Ser…
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Cost Accounting
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
Financial And Managerial Accounting
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Managerial Accounting: The Cornerstone of Busines…
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS