What action should the company president take

Assignment Help Accounting Basics
Reference no: EM13139098

The Home Office Company makes all types of office desks. The Computer Desk Division is currently producing 10,000 desks per year with a capacity of 15,000. The variable costs assigned to each desk are $300 and annual fixed costs of the division are $900,000. The computer desk sells for $400. The Executive Division wants to buy 5,000 desks at $280 for its custom office design business. The Computer Desk manager refused the order because the price is below variable cost. The executive manager argues that the order should be accepted because it will lower the fixed cost per desk from $90 to $60 and will take the division to its capacity, thereby causing operations to be at their most efficient level.

Question 1: Should the order from the Executive Division be accepted by the Computer Desk Division? Why?

Question 2: From the perspective of the Computer Desk Division and the company, should the order be accepted if the Executive Division plans on selling the desks in the outside market for $420 after incurring additional costs of $100 per desk?

Question 3: What action should the company president take? Explain.

Reference no: EM13139098

Questions Cloud

Constitution of new life for early christians : Christian Foundations: An Introduction to Faith in Our Time by Kathleen Fischer and Thomas N. Hart
How much suspended loss can be taken on mr mapp final : John Mapp dies with passive activity property having an adjusted basis of $50,000, suspended losses of $20,000, and a fair market value at the date of Mr. Mapp's death of $77,000. How much suspended loss can be taken on Mr. Mapp's final Form 1040..
What is the percent abundance of the last isotope : The atomic weight of a newly discovered el- ement is 110.352 amu. It has two naturally occuring isotopes. One has a mass of 111.624 amu.
Employ power of visualization as a method of controlling : when you employ power of visualization as a method of controlling stage fright
What action should the company president take : From the perspective of the Computer Desk Division and the company, should the order be accepted if the Executive Division plans on selling the desks in the outside market for $420 after incurring additional costs of $100 per desk?
Can the estate rescind the contract : When the estate refused to transfer the property to the buyers, they sued for specific performance. Can the estate rescind the contract?
Construct confidence interval for the mean monthly rent : Construct a 95% confidence interval for the mean monthly rent of all advertised one-bedroom apartments. A 95% confidence interval for the mean monthly rent is?
Minutes of mixing machine time : Gloddy Company makes three products in a single facility. These products have the following unit product costs: How many minutes of mixing machine time would be required to satisfy demand for all three products.
Music review on evil ways by carlos santana : Latin music is an expression of the cultural diversity and is known for there four basic characteristics its style, cultural background, geography, and language which inspires or is represented in a song.

Reviews

Write a Review

Accounting Basics Questions & Answers

  Determining asset impairment loss

General Optic Corporation operates a manufacturing plant in Arizona. Due to a significant decline in demand for the product manufactured at the Arizona site-Determine the amount of impairment loss

  Accountability in reporting memo

Write a short Memo to a nonfinancial audience explaining how increasing scrutiny and demand for accountability by the public has influenced reporting for not-for-profit and governmental entities.

  Valuation of business assets-financial statements

Why is it important to properly value a business's assets and how does asset valuation impact the financial statements of an organization?

  Manufacturing cost and selling price

The tax rate in Sweden is 55%. There is an additional shipping charge of $50 per unit to ship the material to Sweden. Transfer prices must be set at U.S. manufacturing cost or the selling price in the U.S.

  Accounting-relevance of budgeting

Discuss the relevance of budgeting as it relates to the accounting profession in general. Relate lessons learned from a self-selected reading or from something you learned while working on your accounting profession in general.

  Analysis of company transactions-adjustments

Dana La Fontsee opened Pro Window Washing Inc. on July 1, 2012. During July the following transactions were completed:

  Governmental activities journal

Equipment in general governmental service that had been acquired several years ago by a capital projects fund at a cost of $30,000 was sold for $11,000 cash. Accumulated depreciation of $20,000 existed at the time of the sale. The journal entry to..

  Gain on the consolidated income statement

In the same year Nectar sold land costing $30,000 to Lorikeet for $50,000 On July 1, 2005, Lorikeet sold the land to an unrelated party for $110,000. What was the gain on the consolidated income statement?

  Problem regarding lease or buy

Lease or buy: I can lease a building for $10,000 or buy for $800,000. The weighted average cost of capital is 12%. Which is cheaper buy or lease?

  Wreath process for both old-new manufacturing process

Compute the value added, nonvalue added, and the total lead time of the wreath process for both the old and the new manufacturing process.

  What is the net present value of machine

Assume that revenue is to be recieved at each year end. and the machine has a useful life of three years with zero salvage value. Management requires a 12% return on its investments. what is the net present value of this machine?

  How much should carrie include in her income for the current

During the previous year, Carrie paid $500 of estimated state income tax payments, which she also deducted for federal income tax purposes. Early in the current year.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd