X Ltd., having an installed capacity of 1,00,000 units of a product is currently operating at 70% utilisation. At current levels of input prices, the FOB unit costs (after taking credit for applicable export incentives) work out as follows : Capacity utilisation FOB unit costs per cent 70 97 80 92 90 87 100 82 The Company has received three foreign offers from different sources as under : Source A Source B Source C Advise the company as to whether any or all the export orders should be accepted or not. 5,000 units at $55 per unit FOB 10,000 units at $52 per unit FOB 10,000 units at $51 per unit FOB

X Ltd., having an installed capacity of 1,00,000 units of a product is currently operating at 70% utilisation. At current levels of input prices, the FOB unit costs (after taking credit for applicable export incentives) work out as follows : Capacity utilisation FOB unit costs per cent 70 97 80 92 90 87 100 82 The Company has received three foreign offers from different sources as under : Source A Source B Source C Advise the company as to whether any or all the export orders should be accepted or not. 5,000 units at $55 per unit FOB 10,000 units at $52 per unit FOB 10,000 units at $51 per unit FOB

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 14E: A company has prepared the following statistics regarding its production and sales at different...

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Abilene Industries manufactures and sells three products (XX, W, and ZZ). The sales price and unit variable cost for the three products are as follows: Their sales mix is reflected as a ratio of 4:2:1. Annual fixed costs shared by the three products are $345.000 per year. What are total variable costs for Abilene with their current product mix? Calculate the number of units of each product that will need to be sold in order for Abilene to break even. What is their break-even point in sales dollars? Using an income statement format, prove that this is the break-even point.
A company has prepared the following statistics regarding its production and sales at different capacity levels. Total costs: 1. At what point is break-even reached in sales dollars? In units? (Hint: Use the capacity level to determine the number of units.) 2. If the company is operating at 60% capacity, should it accept an offer from a customer to buy 10,000 units at 3 per unit?
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Emerald Island Company is considering building a manufacturing plant in County Kerry. Predicting sales of 100,000 units, Emerald Isle estimates the following expenses: An Irish firm that specializes in marketing will be engaged to sell the manufactured product and will receive a commission of 10% of the sales price. None of the U.S. home office expense will be allocated to the Irish facility. Required: 1. If the unit sales price is 2, how many units must be sold to break even? (Hint: First compute the variable cost per unit.) 2. Calculate the margin of safety ratio. 3. Calculate the contribution margin ratio.
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Division A has the capacity to produce 120,000 units. The normal selling price of each unit is P80. The variable cost incurred for each unit is P42. Total direct fixed cost for the relevant range is P1,150,000. Division B can use the products of Division A as an input in its manufacturing process but is currently acquiring the said products from an outside supplier. The price per unit is P75. Total annual demand is 30,000 units. 1. Assuming sufficient capacity, what is the minimum acceptable transfer price to Division A? 2. Assuming only 22,500 excess capacity, what is the minimum acceptable transfer price to Division A? 3. Assuming no excess capacity, what is the minimum acceptable transfer price to Division A? 4. What is the maximum acceptable transfer price to Division B?
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At present the manufacturing plant of laksiri Ltd is operating at 50% of its capacity. The following details are related to plant. Rs. Variable cost (Per Unit) 12 Selling Price(Per Unit) 14 Total Fixed cost 45,000 Present Production 20000 units If an exporter offers to bye 10,000 units per month at the rate of Rs.13 per unit Should Laksiry Ltd. accept this offer? Confirm your answer with requird calculations.
Southwest Division offers its product to outside markets for $30. It incurs variable costs of $11 per unit and fixed costs of $37,50040,000 per month based on monthly production of 4,000 units. Northeast Division can acquire the product from an alternate supplier for $31 per unit or from Southwest Division for a transfer price of $30 plus $2 per unit in transportation costs. a. What are the costs and benefits of the alternatives available to Southwest Division and Northeast Division with respect to the transfer of Southwest Division's product? b. How would you answer change if Southwest Division had idle capacity sufficient to cover all of Northeast Division's needs?