Huang automotive is presently operating at 75 of capacity

Assignment Help Accounting Basics

Reference no: EM13604983

Huang Automotive is presently operating at 75% of capacity. The company recently received an offer from a Korean truck manufacturer to purchase 30,000 units of a power steering system component for $200 per unit. Peter Wu, vice-president of sales, noted that since the truck manufacturer approached Huang, there will be no sales commission, normally 4% of sales. Although he recognizes that there will be an additional $2.50 shipping cost for each component, he thinks that accepting the order will get the company's "foot in the door" of an expanding international market. T.J. Chan, vice-president of engineering, feels that any new market should first show its profitability and that the $200 per unit offer is below the unit cost of the component. She also points out that there will be additional setup costs of $300,000 and that Huang will have to lease some special equipment for $215,000. Huang's sales, production, and cost information for the last two years for the component are as follows: 197,000 units 229,000 units Sales $49,250,000 $57,250,000 Direct material costs 16,646,500 19,350,500 Direct labor costs 3,940,000 4,580,000 Overhead costs 19,948,500 21,564,500 Selling and administrative costs 11,152,000 11,664,000 Total costs $51,687,000 $57,159,000 Total costs per unit $262.37 $249.60

1. What would the expected profit be on the special order (use a negative sign for a loss)?

Reference no: EM13604983

Questions Cloud

In fair weather over flat ground there may be a downward : in fair weather over flat ground there may be a downward electric field of 155 nc. a assume that the earth is a

Under the indirect method when accounts receivable decrease : under the indirect method when accounts receivable decrease during the period question 8 options revenues on a cash

Compare the two alternatives making reasonable and : a certain industrial process requires a steady stream of saturated vapor steam at 200 kpa at the rate of 2 kgs. there

At a distance d from a charge the magnitude of the : at a distance d from a charge the magnitude of the electric field is e. what would be the magnitude of the electric

Huang automotive is presently operating at 75 of capacity : huang automotive is presently operating at 75 of capacity. the company recently received an offer from a korean truck

Music equipment owned by the business original purchase : music equipment owned by the business original purchase price was 60000 estimated useful life was 10 years and

If the number of patients seen per day is normally : a sample of 9 days over the past six months showed that a dentist treated the following numbers of

Joy elles vegetable market had the following transactions : joy elles vegetable market had the following transactions during 201x1. issued 50000 of par value common stock for

There are 18 employees working for universal maintenance co : there are 18 employees working for universal maintenance co.. they are paid every second monday for 10 workdays ending

User Account

All Pages