Sd Widget Inc. manufactures widgets. The company has the capacity to produce100,000 widgets per year, but it currently produces and sells 75,000 widgets peryear. The following information relates to current production:Sales price per unitVariable costs per unit:ManufacturingMarketing and administrative$45$25$6Total fixed costs:ManufacturingMarketing and administrativeIf a special sales order is accepted for 6900 widgets at a price of $37 per unit,and fixed costs remain unchanged, how would operating income be affected?(NOTE: Assume regular sales are not affected by the special order.)Increase by $255,300Decrease by $41,400Increase by $1,800,000Increase by $41,400$76,000$24,000

SPECIAL ORDER ANALYSISUntill There is any Information is Provided, There Shall be no additional…

Widget Inc. manufactures widgets. The company has the capacity to produce 100,000 widgets per year, but it currently produces and sells 75,000 widgets per year. The following information relates to current production: Sales price per unit Variable costs per unit: Manufacturing Marketing and administrative $45 $25 $6 Total fixed costs: Manufacturing $76,000 $24,000 Marketing and administrative If a special sales order is accepted for 6900 widgets at a price of $37 per unit, and fixed costs remain unchanged, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.) Increase by $255,300 Decrease by $41,400 Increase by $1,800,000 Increase by $41,400

Widget Inc. manufactures widgets. The company has the capacity to produce 100,000 widgets per year, but it currently produces and sells 75,000 widgets per year. The following information relates to current production: Sales price per unit Variable costs per unit: Manufacturing Marketing and administrative $45 $25 $6 Total fixed costs: Manufacturing $76,000 $24,000 Marketing and administrative If a special sales order is accepted for 6900 widgets at a price of $37 per unit, and fixed costs remain unchanged, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.) Increase by $255,300 Decrease by $41,400 Increase by $1,800,000 Increase by $41,400

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter21: Variable Costing For Management analysis

Section: Chapter Questions

Problem 4CMA: Bethany Company has just completed the first month of producing a new product but has not yet...

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Deuce Sporting Goods manufactures a high-end model tennis racket. The company’s forecasted income statement for the year, before any special orders, is as follows: Fixed costs included in the forecasted income statement are $400,000 in manufacturing cost of goods sold and $200,000 in selling expenses. A new client placed a special order with Deuce, offering to buy 1,000 tennis rackets for $100.00 each. The company will incur no additional selling expenses if it accepts the special order. Assuming that Deuce has sufficient capacity to manufacture 1,000 more tennis rackets, by what amount would differential income increase (decrease) as a result of accepting the special order? (Hint: First compute the variable cost per unit relevant to this decision.)
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Power Corp. makes 2 products: blades for table saws and blades for handsaws. Each product passes through the sharpening machine area, which is the chief constraint during production. Handsaw blades take 15 minutes on the sharpening machine and have a contribution margin per blade of $15. Table saw blades take 20 minutes on the sharpening machine and have a contribution margin per blade of $35. If it is assumed that Power Corp. has 5,000 hours available on the sharpening machine to service a minimum demand for each product of 4,000 units, how many of each product should be made?
Jansen Crafters has the capacity to produce 50,000 oak shelves per year and is currently selling 44,000 shelves for $32 each. Cutrate Furniture approached Jansen about buying 1,200 shelves for bookcases it is building and is willing to pay $26 for each shelf. No packaging will be required for the bulk order. Jansen usually packages shelves for Home Depot at a price of $1.50 per shell. The $1.50 per-shelf cost is included in the unit variable cost of $27, with annual fixed costs of $320.000. However, the $130 packaging cost will not apply in this case. The fixed costs will be unaffected by the special order and the company has the capacity to accept the order. Based on this information, what would be the profit if Jansen accepts the special order? A. Profits will decrease by $1,200. B. Profits will increase by $31,200. C. Profits will increase by $600. D. Profits will increase by $7,200.
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