Sharman Athletic Gear Incorporated (SAG) is considering a special order for 17,000 baseball caps with the logo of East Texas University (ETU) to be purchased by the ETU alumni association. The ETU alumni association is planning to use the caps as gifts and to sell some of the caps at alumni events in celebration of the university’s recent national championship by its baseball team. Sharman’s full manufacturing cost per hat is $5.00, which includes $2.50 fixed overhead cost related to plant capacity and equipment. ETU has made a firm offer of $49,000 for the hats, and Sharman, considering the price to be far below production costs, decides to decline the offer. Required: 1-a. Determine the total cost of the special order.
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Sharman Athletic Gear Incorporated (SAG) is considering a special order for 17,000 baseball caps with the logo of East Texas University (ETU) to be purchased by the ETU alumni association. The ETU alumni association is planning to use the caps as gifts and to sell some of the caps at alumni events in celebration of the university’s recent national championship by its baseball team. Sharman’s full
Required: 1-a. Determine the total cost of the special order.
1-b. In terms of maximizing short-term operating profit, did Sharman make the wrong decision in declining the offer from ETU? multiple choice Yes No
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- Ginocera Inc. is a designer, manufacturer, and distributor of custom gourment kitchen knives. A new kitchen knife series called the Kitchen Ninja was released for production in early 20Y8. In January, the company spent $600,000 to develop a late-night advertising infomercial for the new product. During 20Y8, the company spent an additional $1,400,000 promoting the product through these infomercials, and $800,000 in legal costs. The knives were ready for manufacture on January 1, 20Y8. Ginocera uses a job order cost system to accumulate costs associated with the Kitchen Ninja Knife. The unit direct materials cost for the knife is: Hardened steel blanks (used for knife shaft and blade) $4.00 Wood (for handle) 1.50 Packaging 0.50 The production process is straightforward. First, the hardened steel blanks, which are purchased directly from a raw material supplier, are stamped into a single piece of metal that includes both the blade and the shaft. The stamping machine…Nike has just asked Linger Industries to supply 420,000 cans of balls at a special-order price of $1.10 per can. Nike wants Linger Industries to package the balls under the Nike label (Linger will imprint the Nike logo on each ball and can). As a result, Linger Industries will have to spend $10,000 to change the packaging machinery. Assuming the original volume and costs, should Linger Industries accept this special order? Yes or No?Alert Inc. is a Canadian company that is specialized in the design and manufacturing of intelligent alert systems for seniors. The company sold 20,000 switches at $50 per unit in 2021, spent $20,000 for marketing campaigns, $150,000 for electricity, $250,000 for salaries, $300,000 for alert components, $10,000 for staff training, and $24,000 for rent. The company had a depreciation allowance of $10,000, a bank loan of $100,000 at an annual simple interest rate of 5% and an income tax rate of 25%. At the end of 2021, Alert Inc. possessed $320,000 as cash, $100,000 as inventory, $600,000 as equipment, $100,000 as accounts receivable and $300,000 as accounts payable. List all special costs, semi-variable and direct variable costs of the company in 2021. Produce the income statement of the company in 2021. Complete the balance sheet of the company in 2021 partially provided below. (Figure 1) Complete the cash flow statement of the company in 2021 partially provided below. (Figure 2) How…
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