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S Exercise 4-37 (Algo) Special Orders (LO 4-1, 2) Alpine Luggage has a capacity to produce 370,000 suitcases per year. The company is currently producing and selling 290,000 units per year at a selling price of $399 per case. The cost of producing and selling one case follows: Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs. Total costs Selling price per case: Variable manufacturing costs The company has received a special order for 40,000 suitcases at a price of $248 per case. It will not have to pay any sales commission on the special order, so the variable selling and administrative costs would be only $49 per suitcase. The special order would have no effect on total fixed costs. The company has rejected the offer based on the following computations: Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs Net profit (loss) per case Sales revenue Variable costs: Manufacturing Selling and administrative Required: a. What is the impact on profit for the year if Alpine accepts the special order? (Enter your answers in thousands of dollars. Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) Contribution margin Fixed costs Operating profit $163 40 82 19 $304 Yes No $248 163 40 49 19 $ (23) (All revenues and costs in $000) Status Quo Alternative 290,000 Units, 330,000 Units b. Do you agree with the decision to reject the special order? Difference

S Exercise 4-37 (Algo) Special Orders (LO 4-1, 2) Alpine Luggage has a capacity to produce 370,000 suitcases per year. The company is currently producing and selling 290,000 units per year at a selling price of $399 per case. The cost of producing and selling one case follows: Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs. Total costs Selling price per case: Variable manufacturing costs The company has received a special order for 40,000 suitcases at a price of $248 per case. It will not have to pay any sales commission on the special order, so the variable selling and administrative costs would be only $49 per suitcase. The special order would have no effect on total fixed costs. The company has rejected the offer based on the following computations: Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs Net profit (loss) per case Sales revenue Variable costs: Manufacturing Selling and administrative Required: a. What is the impact on profit for the year if Alpine accepts the special order? (Enter your answers in thousands of dollars. Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) Contribution margin Fixed costs Operating profit $163 40 82 19 $304 Yes No $248 163 40 49 19 $ (23) (All revenues and costs in $000) Status Quo Alternative 290,000 Units, 330,000 Units b. Do you agree with the decision to reject the special order? Difference

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter16: Cost-volume-profit Analysis
Section: Chapter Questions
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S Exercise 4-37 (Algo) Special Orders (LO 4-1, 2) Alpine Luggage has a capacity to produce 370,000 suitcases per year. The company is currently producing and selling 290,000 units per year at a selling price of $399 per case. The cost of producing and selling one case follows: Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs. Total costs Selling price per case: Variable manufacturing costs The company has received a special order for 40,000 suitcases at a price of $248 per case. It will not have to pay any sales commission on the special order, so the variable selling and administrative costs would be only $49 per suitcase. The special order would have no effect on total fixed costs. The company has rejected the offer based on the following computations: Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs Net profit (loss) per case Sales revenue Variable costs: Manufacturing Selling and administrative Contribution margin Fixed costs Operating profit Required: a. What is the impact on profit for the year if Alpine accepts the special order? (Enter your answers in thousands of dollars. Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) $163 40 82 19 $304 Yes No $248 163 40 49 19 $ (23) (All revenues and costs in $000) Status Quo Alternative 290,000 Units, 330,000 Units b. Do you agree with the decision to reject the special order? Difference
Transcribed Image Text:S Exercise 4-37 (Algo) Special Orders (LO 4-1, 2) Alpine Luggage has a capacity to produce 370,000 suitcases per year. The company is currently producing and selling 290,000 units per year at a selling price of $399 per case. The cost of producing and selling one case follows: Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs. Total costs Selling price per case: Variable manufacturing costs The company has received a special order for 40,000 suitcases at a price of $248 per case. It will not have to pay any sales commission on the special order, so the variable selling and administrative costs would be only $49 per suitcase. The special order would have no effect on total fixed costs. The company has rejected the offer based on the following computations: Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs Net profit (loss) per case Sales revenue Variable costs: Manufacturing Selling and administrative Contribution margin Fixed costs Operating profit Required: a. What is the impact on profit for the year if Alpine accepts the special order? (Enter your answers in thousands of dollars. Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) $163 40 82 19 $304 Yes No $248 163 40 49 19 $ (23) (All revenues and costs in $000) Status Quo Alternative 290,000 Units, 330,000 Units b. Do you agree with the decision to reject the special order? Difference
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