Reference no: EM131267719
Your Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 40,000 units per month is as follows:
Direct material $53.00
Direct labor 8.00
Variable manufacturing overhead 2.50
Fixed manufacturing overhead 16.00
Variable selling and administrative expense 3.50
Fixed selling and administrative expense 12.00
The normal selling price of the product is $103.00 per unit.
An order has been received from an overseas customer for 6,000 units to be delivered this month at a special discounted price. This order would have no effect on the company's normal sales and would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $1.50 less per unit on this order than on normal sales.
Direct labor is a variable cost in this company.
QUESTION.
Suppose there is not enough idle capacity to produce all of the units for the overseas customer and accepting the special order would require cutting back on production of 5,000 units for regular customers. What would be the minimum acceptable price per unit for the special order?
|
Production with respect to direct materials-conversion costs
: The Converting Department of Forever Fresh Towel and Tissue Company had 1,200 units in work in process at the beginning of the period, which were 40% complete. During the period, 25,200 units were completed and transferred to the Packing Department. ..
|
|
Construction of capital asset is known as capital investment
: It's always necessary to use the Refresh button when you are creating a Profit and Loss. The acquisition or construction of a capital asset is known as a capital investment. The payback method is used only when the net cash inflows from a capital inv..
|
|
No journal entry required in the first account field
: Frazer Corporation purchased 60 percent of Minnow Corporation’s voting common stock on January 1, 20X1. On January 1, 20X5, Frazer received $234,000 from Minnow for a truck Frazer had purchased on January 1, 20X2, for $284,000. Prepare the worksheet ..
|
|
Estimate variable and fixed cost elements of the annual cost
: Speedy Parcel Service operates a fleet of delivery trucks in a large metropolitan area. A careful study by the company’s cost analyst has determined that if a truck is driven 120,000 miles during a year, the average operating cost is 11.6 cents per m..
|
|
Minimum acceptable price per unit for the special order
: Your Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 40,000 units per month is as follows: Suppose there is not enough idle capacity to produce all of the un..
|
|
Change the total amount of the company fixed costs
: Your Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 40,000 units per month is as follows: An order has been received from an overseas customer for 6,000 uni..
|
|
Contribution format income statement for quarter ended
: Haaki Shop, Inc., is a large retailer of surfboards. The company assembled the information shown below for the quarter ended May 31: Prepare a traditional income statement for the quarter ended May 31. 2. prepare a contribution format income statemen..
|
|
Calculate the payback period for the investment
: The following details are provided by a manufacturing? company: Product line Investment ?$1,100,000 Useful life 12 years Estimated annual net cash inflows for first year ?$400,000 Estimated annual net cash inflows for second year ?$390,000 Estimated ..
|
|
Company direct labor budget for the upcoming fiscal year
: The production manager of Rordan Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Units to be produced 10,000 7,500 8,000 10,300. Complet..
|