Exercise 21.12 (Static) Pricing a Special Order (LO21-1, LO21-2, LO21-3)Mazeppa Corporation sells relays at a selling price of $28 per unit. The company's cost per unit, based on full capacity of 160,000units, is as follows:Direct materialsDirect laborOverhead (2/3 of which is variable)Mazeppa has been approached by a distributor in Montana offering to buy a special order consisting of 30,000 relays. Mazeppa hasthe capacity to fill the order. However, it will incur an additional shipping cost of $2 for each relay it sells to the distributor.a-1. Assume that Mazeppa is currently operating at a level of 100,000 units. Show the calculation for the unit price to charge thedistributor which will generate an increase in operating income of $2 per unit?a-2. What is your interpretation of the changes to the contribution margin per unit and the operating income on account of the unitprice charged to the distributor?b-1. Assume that Mazeppa is currently operating at full capacity. Show the calculation for the unit price to charge the distributor whichwill generate an increase in operating income of $60,000more than it would be without accepting the special order?b-2. What is your interpretation of the changes to the contribution margin per unit and the operating income on account of the unitprice charged to the distributor?Complete this question by entering your answers in the tabs below.Req A1Req A2Reg B1Req B2Prev1 of 4Next >23NOV17味tvl /280649%24 y.ation for the unit price to charge the distributowill generate an increase in operating income of $60,000 more than it would be without accepting the special order?b-2. What is your interpretation of the changes to the contribution margin per unit and the operating income on account of theprice charged to the distributor?Complete this question by entering your answers in the tabs below.Req A1Req A2Req B1Req B2Assume that Mazeppa is currently operating at full capacity. Show the calculation for the unit price to charge the distributorwhich will generate an increase in operating income of $60,000 more than it would be without accepting the specialorder? (Do not round intermediate calculations.)Special SaleSelling priceLess: Direct materialsDirect laborVariable overheadAdditional shipping costsContribution margin per unit< Req A2Req B2>23NOV17étv l280

Contribution margin refers to the sum of money called revenue or profit remained after deducting all…

Rercise 21.12 (Static) Pricing a Special Order (LO21-1, LO21-2, LO21-3) azeppa Corporation sells relays at a selling price of $28 per unit. The company's cost per unit, based on full capacity of 160,000 nits, is as follows: Direct materials Direct labor Overhead (2/3 of which is variable) $ 6 4 9. azeppa has been approached by a distributor in Montana offering to buy a special order consisting of 30,000 relays. Mazeppa ha e capacity to fill the order. However, it will incur an additional shipping cost of $2 for each relay it sells to the distributor. 1. Assume that Mazeppa is currently operating at a level of 100000 unito

Rercise 21.12 (Static) Pricing a Special Order (LO21-1, LO21-2, LO21-3) azeppa Corporation sells relays at a selling price of $28 per unit. The company's cost per unit, based on full capacity of 160,000 nits, is as follows: Direct materials Direct labor Overhead (2/3 of which is variable) $ 6 4 9. azeppa has been approached by a distributor in Montana offering to buy a special order consisting of 30,000 relays. Mazeppa ha e capacity to fill the order. However, it will incur an additional shipping cost of $2 for each relay it sells to the distributor. 1. Assume that Mazeppa is currently operating at a level of 100000 unito

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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38. Use this information for Falcon Co. to answer the question that follow. Falcon Co. produces a single product. Its normal selling price is $27 per unit. The variable costs are $18 per unit. Fixed costs are $18,700 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,490 units with a special price of $21 per unit. Falcon has the capacity to handle the special order, and for this order, a variable selling cost of $2 per unit would be eliminated. If the order is accepted, what would be the impact on net income? a.increase of $9,685 b.increase of $5,960 c.decrease of $4,470 d.increase of $7,450
39. Use this information for Falcon Co. to answer the question that follow.Falcon Co. produces a single product. Its normal selling price is $30 per unit. The variable costs are $19 per unit. Fixed costs are $25,000 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,500 units with a special price of $20 per unit. Falcon has the capacity to handle the special order, and for this order, a variable selling cost of $1 per unit would be eliminated.Should the special order be accepted? a.The answer cannot be determined from the data given. b.There would be no difference in accepting or rejecting the special order. c.yes d.no
Q4 The Portland Company manufactures Part No. 498 for use in its production line. The manufacturing cost per unit for 20,000 units of Part No. 498 is as follows: Direct materials $4 Variable direct manufacturing labor 22 Variable manufacturing overhead 17 Fixed manufacturing overhead allocated 20 Total manufacturing cost per unit $63 The Counter Company has offered to sell 20,000 units of Part No. 498 to Portland for $58 per unit. Portland will make the decision to buy the part from Counter if there is an overall savings of at least $20,000 for Portland. If Portland accepts Counter’s offer, $5 per unit of the fixed manufacturing overhead allocated would be eliminated. Furthermore, Portland has determined that the released facilities could be used to save relevant costs in the manufacture of Part No. 575. For Portland to…
QUESTION 9 QRC Company is trying to decide which one of two alternatives it will accept. The costs and revenues associated with each alternative are listed below: Alternative A Alternative B Projected revenue $ 62,500 $ 75,000 Unit-level costs 12,500 18,000 Batch-level costs 6,250 12,000 Product-level costs 7,500 8,500 Facility-level costs 5,000 6,250 What is the differential revenue for this decision? $62,500 $25,000 $75,000 $12,500
QUESTION 41 dKristen Company manufactures three products: X, Y, and Z. The demand for each product is 100 units. The selling price, variable expenses, and contribution margin for one unit of each product follow: Product X Y Z Selling price $140 $300 $390 Less variable expenses (Only Special steel) 50 100 150 Contribution margin $90 $200 $240 Steel need to make 1 unit 1 kg 2 kg 3 kg The same special steel is used for all three products. 1 kg of the steel costs $50. Kristen can buy up to 400 kgs. Assume that Kristen can also buy Product Y from an importer and resell it. The purchase price of Y would be $270 per unit. In this case, in what order does the company have to make the products? A. X è Z è Y B. Y è X è Z C. Y è Z è X D. Z è X è Y E. X è Y è Z
Ma1. 7) Bluebird Manufacturing has received a special one-time order for 16,600 bird feeders at $4.60 per unit. Bluebird currently produces and sells 75,000 units at $8.60 each. This level represents 80% of its capacity. Production costs for these units are $5.10 per unit, which includes $3.85 of variable costs and $2.85 of fixed costs. If the special offer is accepted, there will be no incremental fixed cost. If Bluebird accepts this additional business, the effect on income will be: Multiple Choice $12,450 increase. $8,300 decrease. $76,360 increase. $63,910 increase. $63,910 decrease.
Week 8Spark Ltd has two divisions, assembly and electrical. The assembly division transfers partiallycompleted components to the electrical division at a predetermined transfer price. The assemblydivision’s standard variable production cost per unit is $550. This division has spare capacity, and itcould sell all its components to outside buyers at $680 per unit in a perfectly competitive market.Required:-What transfer price would you recommend if there was no outside market for the transferred component and the assembly division had spare capacity? - Explain how negotiation between the supplying and buying units may be used to set transferprices. How does this relate to the general transfer pricing rule?
34 Waterway Co. sells product P-14 at a price of $48 a unit. The per-unit cost data are direct materials $16, direct labour $12, and overhead $12 (75% variable). Waterway Co. has sufficient capacity to accept a special order for 39,300 units, but at a discount of 25% from the regular price. Selling costs associated with this order would be $3 per unit. Determine whether Waterway Co. should accept the special order. (Enter loss with a negative sign preceding the number, e.g. -15,000 or parenthesis, e.g. (15,000).) Please donot provide solution in image format and it should be in step by step format and provide fast solution
Q3The Fresno Company manufactures slippers and sells them at $13 a pair. Variable manufacturing cost is $6.50 a pair, and allocated fixed manufacturing cost is $2.00 a pair. It has enough idle capacity available to accept a one-time-only special order of 5,000 pairs of slippers at $8.50 a pair. Fresno will not incur any marketing costs as a result of the special order. What is the amount of increase in operating income if the special order is accepted?
Marie Company’s unit manufacturing costs are: Variable Cost P50 Fixed Cost 25 A special order for 2,000 units has been received from a foreign company. The unit selling price requested is P55. The normal unit selling price is P80. If the order is accepted, unit variable costs will increase by P2 for additional freight costs. Marie has sufficient capacity to accommodate the special order. How much is the incremental profit or loss if the order is accepted?
33. Use this information for Stryker Industries to answer the question that follow. Stryker Industries received an offer from an exporter for 25,000 units of product at $17 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price $22 Unit manufacturing costs: Variable 10 Fixed 6 What is the differential cost from the acceptance of the offer? a.$425,000 b.$550,000 c.$250,000 d.$150,000
ch7-45- I have asked this question earlier and i found a possible miscalculation for the total variable costs in step 3. Please check and confirm. ch7-Q#45 Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill, a larger stationary gas grill, and the specialty smoker. In the coming year, Texas-Q expects to sell 20,000 portable grills, 50,000 stationary grills, and 5,000 smokers. Information on the three models is as follows: Portable Stationary Smokers Price $90 $205 $252 Variable cost per unit 46 132 140 Total fixed cost is $2,219,240. Required: 1. What is the sales mix of portable grills to stationary grills to smokers? 2. Compute the break-even quantity of each product. 3. Prepare an income statement for Texas-Q for the coming year. What is the overall contribution margin ratio? Use the contribution margin ratio to compute overall break-even sales revenue. Enter the contribution…