do not give solution in image format 1201:57:21eBookAnchor Company manufactures a variety of tool boxes. The firm is currently operating at 80% of its full capacity of 5,600 machine-hours per month. Each unit requires 30 minutes of machine time. Its sales manager has been looking for special orders to makeproductive use of the excess capacity. JCL Ltd., a potential customer, has offered to buy 10,000 tool boxes at $15.50 per box, providedthat the entire quantity is delivered in two months. The current per-box cost data are as follows:Direct materials.Direct labour (% hour at $14.00/hour)Total manufacturing overheadTotal unit product cost$ 4.507.004.00$15.50Both fixed and variable overhead are allocated using direct labour-hours as a base. Variable overhead is $3.50 per direct labour-hour.Without the order, Anchor would have enough business to operate at 4,480 direct labour-hours in each of the next two months. Theregular selling price of the tool boxes is $18.50. A sales commission of 50 cents per unit is paid to sales representatives on all regularsales.No additional selling or administrative expenses are anticipated on account of accepting this special order and no commissions will bepaid on this special order.The production manager is concerned about the labour time that 10,000 boxes would require. She cannot schedule overtime becauseAnchor has a policy against it. JCL will not accept fewer than 10,000 tool boxes. Therefore, in order to fill the special order, it would benecessary for Anchor Company to divert some of its regular sales to the special order.Required:1-a. Prepare contribution margin income statements for the two-month period both with and without the special order. (Leave no cellsblank - be certain to enter "0" wherever required.)ANCHOR COMPANYContribution Margin Income StatementWithout Special With SpecialOrderOrder4 1201:57:02eBookANCHOR COMPANYContribution Margin Income StatementTotal sales revenueLess variable costsLess fixed costsWithout Special With SpecialOrderOrderO AcceptO Not Accept$$S0 $0 $0 $0001-b. Based on financial considerations, should Anchor accept the order?2. This part of the question is not part of your Connect assignment.4

Working Notes 1: 1st case – Without special order Total direct-labor hours available = 4480 direct…

Answered: Required: 1-a. Prepare contribution…

Required: 1-a. Prepare contribution margin income statements for the two-month period both with and without the special order. (Leave no cells blank be certain to enter "0" wherever required.)

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter15: Managing Short-term Assets

Section: Chapter Questions

Problem 13PROB

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