What will the price be if preston follows its normal pricing

Assignment Help Managerial Accounting
Reference no: EM13955977

The company's policy is to price deliveries at 25 percent over full cost per cubic yard (including an allowance for administrative costs). At the start of 2011, the company estimated costs as follows:
Material costs = $70 per cubic yard
Delivery costs = $500,000 per year + $9 (mile) + $50 (truck hour)
Yard operation costs = $300,000 per year + $15 per cubic yard
Administrative costs = $2,000,000 per year
Delivery costs include a rate per mile, recognizing that more miles result in more gas and maintenance costs, and a rate per truck hour since, even if a delivery truck is kept waiting at a job site, the truck must be kept running (so the concrete mix will not solidify) and the driver must be paid. At the start of 201 1, the company estimated that it would deliver 500,000 cubic yards.

Required:

a. On October 28, Fairview Construction Company asked Preston to deliver 6,000 cubic yards of concrete. The job will require driving 8,400 miles and 300 truck hours. What will the price be if Preston follows its normal pricing policy?

b. A sharp increase in interest rates has reduced housing starts and the demand for concrete. Fairview has indicated that it will sign a firm order agreement only if the price is $110 per cubic yard. Should Preston accept the order? Briefly indicate factors that, while hard to quantify, should be taken into account in this decision.

Reference no: EM13955977

Questions Cloud

Explain why companies are concerned about the financial : Explain why companies are concerned about the financial viability of suppliers and customers.
Code of ethics for professional accountants : One of the people in the accounting department keeps the invoice and delivery documents in a desk until either the customer changes their mind, in which case the sale is cancelled or the merchandise is sent at the end of the 30 day waiting period...
Probability of randomly generating nine digits : Assume that one of the subjects is randomly selected. Find the probability that the selected subject is not pregnant, given that the test was negative. I the result the same as the probability of a negative test result given that the selected subj..
How many oscillations the pendulum will make : While the pendulum swings, the whole system moves vertically down at a rate of 1mm/min. Considering that the pendulum has a small amplitude, how many oscillations the pendulum will make when it has moved 1m distance downward?
What will the price be if preston follows its normal pricing : On October 28, Fairview Construction Company asked Preston to deliver 6,000 cubic yards of concrete. The job will require driving 8,400 miles and 300 truck hours. What will the price be if Preston follows its normal pricing policy?
Construct a cash flow diagram to find the present worth : Determine the present worth of a geometric gradient series with a cash flow - List the essential elements involved in decision making in engineering economic analysis.
Compute short-run equilibrium levels of output consumption : Compute the short-run equilibrium levels of output, consumption and investment. If the central bank raised the interest rate to 6%, compute the new level of output.
Objectives of assessing interperiod equity : The dual objectives of assessing interperiod equity and ensuring budgetary compliance may necessitate different accounting practices.
Write a paragraph explaining why net income : Write a paragraph explaining why net income that is substantially higher than cash flow from operations may indicate manipulation of earnings.

Reviews

Write a Review

 

Managerial Accounting Questions & Answers

  Identify the errors in the accountants adjusting entries

The accountant for Rooster Laundry prepared the following unadjusted and adjusted trial balances. Assume that all balances in the unadjusted trial balance and the amounts of the adjustments are correct. Identify the errors in the accountant's adju..

  Standard costs and plans for fiscal current year

Spam Inc. had the following standard costs and plans for fiscal current year for the production' of custom meat products Plan 500,000 Plan Direct Material

  Prepare an analysis of the financial impact

Prepare an analysis of the financial impact of the exhibition on the Ruthmueller Museum, assuming attendance is 10,000.  Does offering the exhibition appear to be a good decision from a financial standpoint?

  Cvp analysis of advanced electronics

Houston-based Advanced Electronics manufactures audio speakers for desktop computers. The following data relates to period just ended when the company manufactured and sold 42,000 speaker sets:

  Suppose a simulation model has two random variables eg

suppose a simulation model has two random variables eg. arrival time andservice time in a queuing problem.nbsp what is

  Determining joint cost problems

Calculate the amount of joint cost allocated to commercial building lumber (CBL) on a physical units basis. Calculate the amount of joint cost allocated to the mine support braces (MSB) on a relative-salesvalue basis.

  Type your homework question here like help me understand

type your homework question here like help me understand this chemistry profinkler residential treatment facility

  Western feels that if they eliminate the east store

Western feels that if they eliminate the East store that sales in the West store will decline by 25%. If they close the East store, overall company net income will:

  Write a paragraph elaborating on the justification

Write a paragraph elaborating on the justification provided by Suzette Barger.

  Implementing strategic management accounting system

During the recession, the company suffered losses and it was pointed out that the lack of management accounting system was one of the reasons. Implementing Strategic Management Accounting system has been given in the solution

  The following refers to units processed in sunfllower

Compute the total equivalent units of production with respect to labor for March using the weighted average inventory method.

  Business question-cvp analysis

Gabby's Wedding Cakes creates elaborate wedding cakes. Calculate the break-even point for a month in units. How many cakes must be sold to earn a monthly profit of $10,000?

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