Instructions a. Prepare an incremental analysis for the special order. b. Should Gruden accept the special order? Why or why not? c. What assumptions underlie the decision made in part (b)?
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- Deuce Sporting Goods manufactures a high-end model tennis racket. The company’s forecasted income statement for the year, before any special orders, is as follows: Fixed costs included in the forecasted income statement are $400,000 in manufacturing cost of goods sold and $200,000 in selling expenses. A new client placed a special order with Deuce, offering to buy 1,000 tennis rackets for $100.00 each. The company will incur no additional selling expenses if it accepts the special order. Assuming that Deuce has sufficient capacity to manufacture 1,000 more tennis rackets, by what amount would differential income increase (decrease) as a result of accepting the special order? (Hint: First compute the variable cost per unit relevant to this decision.)Zena Technology sells arc computer printers for $55 per unit. Unit product costs are: A special order to purchase 15,000 arc printers has recently been received from another company and Zena has idle capacity to fill the order. Zena will incur an additional $2 per printer for additional labor costs due to a slight modification the buyer wants made to the original product. One-third of the manufacturing overhead costs is fixed and will be incurred no matter how many units are produced. When negotiating the price, what is the minimum selling price that Zena should accept for this special order?E8-5A Special Order Pope Company manufacture a variety of hiking boots and has received a special one-time only order from a new customer. Pope has sufficient idle capacity to accept the special order to manufacturer 1,000 pairs of boots at a price of $50.00 per pair. Pope's normal selling price is $65.00 per pair of sneakers. Variable manufacturuing costs are $35.00 per pair and fixed manufacturing costs are $12.00 a pair. Pope's variable selling expense for its normal line of sneakers is $1.00 per pair. What would the effect on Pope's operating income be if the company accepted the special order?
- Luca Inc. has received a special order for 2,000 units of its product at a special price of $75. The product normally sells for $100 and has the following manufacturing costs: Assume that Luca Inc. has sufficient capacity to fill the order without harming normal production and sales. If Luca Inc. accepts the order, what effect will the order have on the company's short-term profit? Per Unit Direct materials $30 Direct labor $20 Variable manufacturing overhead $15 Fixed manufacturing overhead $25 a. $50,000 decrease b. $30,000 increase c. $20,000 increase d. $30,000 decreasenick limited sells creme, a cream suitable for variety of first aid uses. The company commenced operations earlier this year and expects to sell 100,000 tubes of Super crème. The following Information is available: Selling price per tube 7.00Direct material cost per tube 2.10 Direct labour cost per tube 1.35Variable overhead cost per tube 0.75Total fixed costs for the year. 210,000RequiredWhat is the Break-even point (BEP) in tubes and sales revenue? 4) If the company wanted to earn a profit of UGX 46,200 for the year how many tubes of Super crème must be sold? By what percentage should expected sales revenue fall before NICK Limited starts to make a loss? State the assumptions and limitations of break-even analysisAdams Furniture receives a special order for 10 sofas for a special price of $6,000. The direct materials and direct labor for each sofa are $140. In addition, supervision and other fixed overhead costs average $160 per sofa. Required: a1. What is the impact on operating income from accepting the special order? a2. Based solely on a short-term financial analysis, should Adams accept the special order? b1. If Adams is currently operating at full capacity, what would be the opportunity cost per unit for lost sales to regular customers if the special sales order is accepted and the selling price per unit on regular sales equals $900? b2. Based solely on a short-term financial analysis, should Adams accept the special order if it is currently operating at full capacity?
- ACCEPT or REJECT (SPECIAL ORDER DECISION) XYZ Company produces and sells toy cars. Each toy car sells for P50 and the company sells approximately 500,000 toy cars each year. Unit cost data for 2022 are given below: Fixed Variable Direct Material - P15 Direct Labor - P12 Factory Overhead P8 P5 Overhead Costs P2 P3 XYZ has received an offer from a foreign customer to purchase 15,000 toy cars at P40. Domestic sales will not be affected by this transaction. If the offer is accepted, the company has idle capacity to accommodate the order but the unit variable distribution costs will increase by P2 for insurance andimport duties. REQUIREMENTS: 1. What is the relevant unit cost of the special order? 2. Should Brenda accept or reject the special order? SHOW SOLUTIONS ON EACH REQUIREMENTE6.5 (LO 1), AP Carey Company had sales in 2021 of $1,500,000 on 60,000 units. Variable costs totaled $900,000, and fixed costs totaled $500,000. A new raw material is available that will decrease the unit variable costs by 20% (or $3). However, to process the new raw material, fixed operating costs will increase by $100,000. Management feels that one-half of the decline in the unit variable costs should be passed on to customers in the form of a sales price reduction. The marketing department expects that this sales price reduction will result in a 5% increase in the number of units sold. Instructions Prepare a projected CVP income statement for 2022 (a) assuming the changes have not been made, and (b) assuming that changes are made as described. Compute break-even point in sales units for a company with more than one product.Camp Corporation produces a single product that it currently sells for P10. Fixed expenses are P120,000 for the year and variable expenses are P6 per unit. In addition, Camp’s salespersons are paid a commission of 10% of their sales.A customer has just approached Camp to make a special, one-time purchase of 10,000 units. These units would not be sold by the salespeople, and therefore no commission would have to be paid. The price Camp would have to charge on this special order to earn an additional profit of P40,000 is: P9.00 per unit P10.00 per unit P5.00 per unit P11.20 per unit
- Choose the correct letter of answer Sela Company, sells Product R for P5 per unit. The fixed costs are P200,000, and the variable costs are 45% of the selling price. The sales in pesos required for Canary to realize a net profit of 12% of sales is: *a. P209,302b. P 55,814c. P465,116 d. none of the aboveThe Carlo Company has received a special order for 600 units of product B for P12 a unit. It usually sells for P19 a unit with a cost of P15 a unit inclusive of P1.5 a unit as sales commission that will not be paid on this order. The cost also includes P6 in manufacturing overhead, 2/3 of which is a common overhead allocation. Assuming the excess capacity is available and this order requires a mold that costs P150. What is the increase(decrease) in profit for this special order?In 20A, Santos presented total variable costs at P687.50; total fixed costs at P6,750,000; sales price per unit P1,250; sold 20,000 units; tax rate at 40%. What is the maximum amount that can be spent on additional advertising at the sales level 22,000 units in 20B if an after tax net income P3,000,000 is desired. P500,000 P562,500 P625,000 None of the above
