The Gannett Company provides landscaping services to corporations and businesses. All its landscaping work requires Gannett to use landscaping equipment. Its landscaping equipment has the capacity to do 14,000 hours of landscaping work. It currently anticipates getting orders that would utilize 13,200 hours of equipment time. Gannett charges $115 per hour for landscaping work. Cost information for the current expected activity level is as follows: (Click the icon to view the cost information.) Read the requirement. Begin by completing an analysis, and start by showing the computation of the company's contribution margin without the landscaping work from Russell. Next, calculate the contribution margin of the special order. (Calculate the contribution margin for the special order assuming there are no constraints on landscaping hours.) Revenues Variable costs: Landscaping costs Marketing costs Total variable costs Contribution margin Contribution Margin for Existing Landscape Contribution Margin for Russell Corporation Customers Landscaping Work 1,518,000 792,000 75,900 867,900 650,100
The Gannett Company provides landscaping services to corporations and businesses. All its landscaping work requires Gannett to use landscaping equipment. Its landscaping equipment has the capacity to do 14,000 hours of landscaping work. It currently anticipates getting orders that would utilize 13,200 hours of equipment time. Gannett charges $115 per hour for landscaping work. Cost information for the current expected activity level is as follows: (Click the icon to view the cost information.) Read the requirement. Begin by completing an analysis, and start by showing the computation of the company's contribution margin without the landscaping work from Russell. Next, calculate the contribution margin of the special order. (Calculate the contribution margin for the special order assuming there are no constraints on landscaping hours.) Revenues Variable costs: Landscaping costs Marketing costs Total variable costs Contribution margin Contribution Margin for Existing Landscape Contribution Margin for Russell Corporation Customers Landscaping Work 1,518,000 792,000 75,900 867,900 650,100
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints
Section: Chapter Questions
Problem 16E
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