Which of the following is relevant to the special order?
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Excercise 3.18
A company is considering a special order for 1,000 units to be priced at $8.90 (the normal price would be
$11.50). The order would require specialized materials costing $4.00 per unit. Direct labor and variable
factory
company has excess capacity, and acceptance of the order would not raise total fixed factory overhead.
The warehouse, however, would have to add capacity costing $1,300. Which of the following is relevant
to the special order?
a. $11.50
b. $1.20
c. $7.35
d. $8.90
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- Zena Technology sells arc computer printers for $55 per unit. Unit product costs are: A special order to purchase 15,000 arc printers has recently been received from another company and Zena has idle capacity to fill the order. Zena will incur an additional $2 per printer for additional labor costs due to a slight modification the buyer wants made to the original product. One-third of the manufacturing overhead costs is fixed and will be incurred no matter how many units are produced. When negotiating the price, what is the minimum selling price that Zena should accept for this special order?Bolger and Co. manufactures large gaskets for the turbine industry. Bolgers per-unit sales price and variable costs for the current year are as follows: Bolgers total fixed costs aggregate to 360,000. Bolgers labor agreement is expiring at the end of the year, and management is concerned about the effects of a new labor agreement on its break-even point in units. The controller performed a sensitivity analysis to ascertain the estimated effect of a 10-per-unit direct labor increase and a 10,000 reduction in fixed costs. Based on these data, the break-even point would: a. decrease by 1,000 units. b. decrease by 125 units. c. increase by 375 units. d. increase by 500 units.Bethany Company has just completed the first month of producing a new product but has not yet shipped any of this product. The product incurred variable manufacturing costs of 5,000,000, fixed manufacturing costs of 2,000,000, variable marketing costs of 1,000,000, and fixed marketing costs of 3,000,000. Under the variable costing concept, the inventory value of the new product would be: a. 5,000,000. b. 6,000,000. c. 8,000,000. d. 11,000,000.
- Wehrs Corporation has received a request for a special order of 8,300 units of product K19 for $45.20 each. The normal selling price of this product is $50.30 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product K19 is computed as follows: Direct materials $ 16.00 Direct labor 5.30 Variable manufacturing overhead 2.50 Fixed manufacturing overhead 5.40 Unit product cost $ 29.20 Direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like some modifications made to product K19 that would increase the variable costs by $4.90 per unit and that would require a one-time investment of $44,700 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. Required: Determine the…Mooran Corporation has been asked by a customer to fill a special order for 9,000 units of product AB40 for $20.50 a unit. While the product would be modified slightly for the special order, product AB's normal unit product cost is $14.40: Direct materials $ 3.10 Direct labor 1.50 Variable manufacturing overhead 6.40 Fixed manufacturing overhead 3.40 Unit product cost $ 14.40 Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product AB45 that would increase the variable costs by $5.00 per unit and that would require an investment of $36,000 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. The annual financial…A customer has requested that Lewelling Corporation fill a special order for 3,200 units of product S47 for $28 a unit. While the product would be modified slightly for the special order, product S47's normal unit product cost is $23.50: Direct materials $ 6.80 Direct labor 4.00 Variable manufacturing overhead 3.90 Fixed manufacturing overhead 8.80 Unit product cost $ 23.50 Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product S47 that would increase the variable costs by $2.40 per unit and that would require an investment of $12,000.00 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. The annual financial advantage (disadvantage) for the company as a result of…
- A customer has requested that Lewelling Corporation fill a special order for 2,700 units of product S47 for $33 a unit. While the product would be modified slightly for the special order, product S47's normal unit product cost is $18.40: Direct materials $ 5.10 Direct labor 4.00 Variable manufacturing overhead 2.20 Fixed manufacturing overhead 7.10 Unit product cost $ 18.40 Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product S47 that would increase the variable costs by $1.40 per unit and that would require an investment of $17,000.00 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. The annual financial advantage (disadvantage) for the company as a result of…1. Calea Corp. has received a request for a special order of 6,000 units of product Y69 for P13.70 each. Y69’s unit product cost is P11.50, determined as follows: Direct materials, P2.50; Direct labor, P1.90; Variable manufacturing overhead, P2.30; fixed manufacturing overhead, P4.80. Direct labor is a variable cost. The special order would have no effect on the company’s total fixed manufacturing costs. The customer would like modifications made to product Y69 that would increase variable cost by P8.10 per unit and that would require an investment of P20,000 in special molds that would have no salvage value. This special order would have no effect on the company’s other sales. The company has ample spare capacity for producing the special order. If the special order is accepted, what would be the company’s increase or (decrease) in overall net operating income? 2. Selected information from the accounting records of Vigor Co. is as follows: Net accounts receivable at Dec. 31, 2018,…your corporation has received a request for a special order of 6,000 units of its products for $16 each. the product unit cost is as follows: (see attached image). the special order would have no effect on the company’s total fixed manufacturing overhead costs. of the special order is accepted, Variable selling cost would decrease by 60%. This special order would have no effect on the company’s other sales. The company has ample spare capacity for producing the special order. If the special order is excepted what is the impact on the companies overall net operating income?
- A company receives a special one-time order for 3,000 units of its product at $15 per unit. The company has excess capacity and it currently produces and sells the units at $20 each to its regular customers. Production costs are $13.50 per unit, which includes $9 of variable costs. To produce the special order, the company must incur additional fixed costs of $5,000. Should the company accept the special order? a. Yes, because incremental revenue exceeds incremental costs. b. No, because incremental costs exceed incremental revenue. c. No, because the units are being sold for $5 less than the regular price. d. Yes, because incremental costs exceed incremental revenue. e. No, because incremental costs exceed $15 per unit when total costs are considered.Oriole Company incurs the following costs to produce 10200 units of a subcomponent: Direct materials $8568 Direct labor 11526 Variable overhead 12852 Fixed overhead 16200 An outside supplier has offered to sell Oriole the subcomponent for $2.85 a unit. No fixed overhead costs are avoidable.If Oriole accepts the offer, it could use the production capacity to produce another product that would generate additional income of $3600. The increase (decrease) in net income from accepting the offer would be $(276). $7476. $276. $(3600).A company receives a special order for 200 units that requires stamping the buyer’s name on each unit, yielding an additional fixed cost of $400. Without the order, the company operates at 75% of capacity and produces 7,500 units of product at the costs below. The company’s normal selling price is $22 per unit. The requested sales price for the special order is $18 per unit. The special order will not affect normal unit sales and will not increase fixed over head or fixed selling expenses. Variable selling expenses on the special order are reduced to one-half the normal amount. Should the company accept the special order?
