Exercise 21.12 (Static) Pricing a Special Order (LO21-1, LO21-2, LO21-3)Mazeppa Corporation sells relays at a selling price of $28 per unit. The company's cost per unit, based on full capacity of 160,000units, is as follows:Direct materialsDirect laborOverhead (2/3 of which is variable)$ 6Mazeppa has been approached by a distributor in Montan a 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 $60,000 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 the unitprice charged to the distributor?Complete this question by entering your answers in the tabs below.Req A1Req A2Req B1Req B2Prev1 of 4Next >23NOV威tv l A17280449%24 Ih operating income of $2 per unit?Tor the unit price to charge tha-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?b-1. Assume that Mazeppa is currently operating at full capacity. Show the calculation 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 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? (Do not round intermediate calculations.)Special SaleSelling priceLess: Direct materialsDirect laborVariable overheadAdditional shipping costsContribution margin per unitReq A1Req A2<>< Prev1 of 4Next >A GA23NOV17étv uli280

operating income of $2 per unit? foP the unit price to charge th a-2. What is your interpretation of the changes to the contribution margin per unit and the operating income on account of the price 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 distributo will 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 the price charged to the distributor? Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B1 Req B2 Assume that Mazeppa is currently operating at a level of 100,000 units. Show the calculation for the unit price to charge the distributor which will generate an increase in operating income of $2 per unit? (Do not round intermediate calculations.) Special Sale Selling price Less: Direct materials Direct labor Variable overhead Additional shipping costs Contribution margin per unit Req AT Req A2 < Prev 1 of 4 Next > .. 23 NOV 17 étv li

operating income of $2 per unit? foP the unit price to charge th a-2. What is your interpretation of the changes to the contribution margin per unit and the operating income on account of the price 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 distributo will 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 the price charged to the distributor? Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B1 Req B2 Assume that Mazeppa is currently operating at a level of 100,000 units. Show the calculation for the unit price to charge the distributor which will generate an increase in operating income of $2 per unit? (Do not round intermediate calculations.) Special Sale Selling price Less: Direct materials Direct labor Variable overhead Additional shipping costs Contribution margin per unit Req AT Req A2 < Prev 1 of 4 Next > .. 23 NOV 17 étv li

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

Chapter11: Performance Evaluation And Decentralization

Section: Chapter Questions

Problem 47P: (Appendix 11A) Cycle Time, Velocity, Conversion Cost The theoretical cycle time for a product is 30...

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(Appendix 11A) Cycle Time, Velocity, Conversion Cost The theoretical cycle time for a product is 30 minutes per unit. The budgeted conversion costs for the manufacturing cell are 2,700,000 per year. The total labor minutes available are 600,000. During the year, the cell was able to produce 1.5 units of the product per hour. Suppose also that production incentives exist to minimize unit product costs. Required: 1. Compute the theoretical conversion cost per unit. 2. Compute the applied conversion cost per unit (the amount of conversion cost actually assigned to the product). 3. CONCEPTUAL CONNECTION Discuss how this approach to assigning conversion costs can improve delivery time performance.
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
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
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
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 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
QUESTION 42 Kristen 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. Assume that the company has made all units required for X and Y. Now Kristen does not have enough steel remaining to make all 100 units demanded for Z. An outside vendor can furnish Kristen with additional steel at some price. How much is the highest price that Kristen is willing to pay per kg of additional steel? A. $100 B. $50 C. $80 D.…
PROBLEM 1: MAKE or BUY Limos Mfg. has been manufacturing furniture sets and is considering whether tomake or outsource its own seat cushions needed for its chairs. The expected priceof the cushions is P50 per unit. If it continue to produce the company would incur the following unit cost: Directmaterials P13, Direct Labor P15, Variable overhead 5, Fixed overhead (based onthe average production requirement of 10,000 units) P20 for a total of P53. Let us assume that materials and labor costs are expected to increase by 20% nextperiod. Factory overhead costs will remain the same, except that 40% of the fixedoverhead will be eliminated in case the company decides to buy the seat cushionsfrom other suppliers. Moreover, the facilities presently being used in the manufactureof seat cushions can be utilized to manufacture another part of the main product incase such facilities become vacant when the company decides to stop producing theseat cushions. The alternative use of resources would…
Question No. 1. A firm is evaluating the alternative of manufacturing a part that is currently being outsourced from a supplier. The relevant information is provided below: For in-house manufacturing, using this information, determine the break-even quantity for which the firm would be indifferent between manufacturing the part in-house or outsourcing it. Given: Annual fixed cost = P2,250,000.00 Variable cost per part = P7,000.00 For purchasing from supplier Purchase price per part = P8,000.00 Question No. 2. In relation to the previous question answer the following: If demand is forecast to be greater than 2,500 parts, should the firm make the part in-house or purchase it from a supplier? The marketing department forecasts that the upcoming year’s demand will be 2,500 units. A new supplier offers to make parts for P7,500.00 each. Should the company accept the offer? What is the maximum price per part the manufacturer should be willing to pay to the supplier if the forecast…
1. Make-or-Buy Decision Companion Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $61 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 39% of direct labor cost. The fully absorbed unit costs to produce comparable carrying cases are expected to be as follows: Direct materials $29 Direct labor 20 Factory overhead (39% of direct labor) 7.8 Total cost per unit $56.8 If Companion Computer Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 15% of the direct labor costs. 2. Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $599,500 and has $349,400 of accumulated depreciation to date, with a new machine that has a purchase price of $483,600. The old machine could be sold for $63,000.…
Special Order Problem Empresas Santander produces key chains. The variable costs of making each keychain total $ 2.00. Fixed product costs total $ 500,000. The company has the capacity to produce 2,000,000 key chains. 1,800,000 key chains are currently being sold. The variable administrative costs total $ 1.50 per unit, of those $ 0.25 are commissions. The fixed costs for the period total $ 200,000. The key chains sell for $ 7.00. The company received several special orders, if the order is accepted it is understood that they do not affect the regular sales of the product: a. 100,000 key fobs at $ 2.50 per key fob and commissions cost incurred. b. 200,000 key fobs at $ 2.25 per key fob and no commission cost incurred. c. 300,000 key fobs at $ 3.00 per key fob, commission cost and $ 30,000 of additional fixed product costs incurred.