Chapter2: Building Blocks Of Managerial Accounting
Section: Chapter Questions
Problem 4EB: Roper Furniture manufactures office furniture and tracks cost data across their process. The...
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What is the short-term effect on operating profit if Award Plus Company accepts the special sales order? (Round your answer
to nearest whole dollar amount.)
Operating profit (loss)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff2ee19bc-d40b-43d6-af4a-2bda86405c90%2F4fce4173-185c-42d4-85ed-a55aa75e8076%2F0dpqnir_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Required 3
What is the short-term effect on operating profit if Award Plus Company accepts the special sales order? (Round your answer
to nearest whole dollar amount.)
Operating profit (loss)
![Award Plus Company manufactures medals for winners of athletic events and other contests. Its manufacturing plant
has the capacity to produce 10,000 medals each month; current monthly production is 7,640 medals. The company
normally charges $260 per medal. Variable costs and fixed costs for the current activity level follow:
Current
Product Costs
Variable costs
Manufacturing
Labor
Material
Marketing
Total variable costs
Fixed costs
Manufacturing
Marketing
Total fixed costs
$ 382,000
305,600
191,000
$ 878,600
$ 282,000
232,000
$ 514,000
$ 1,392,600
Total costs
Award Plus has just received a special one-time order for 2,360 medals at $150 per medal. For this particular order, no
variable marketing costs will be incurred. Cathy Senna, a management accountant with Award Plus, has been assigned
the task of analyzing this order and recommending whether the company should accept or reject it. After examining
the costs, Senna suggested to her supervisor, Gerard LePenn, who is the controller, that they request competitive bids
from vendors for the raw materials because the current quote seems high. LePenn insisted that the prices are in line
with those of other vendors and told her that she was not to discuss her observations with anyone else. Senna later
discovered that LePenn is a brother-in-law of the owner of the current raw materials supply vendor.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff2ee19bc-d40b-43d6-af4a-2bda86405c90%2F4fce4173-185c-42d4-85ed-a55aa75e8076%2F98w67e1r_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Award Plus Company manufactures medals for winners of athletic events and other contests. Its manufacturing plant
has the capacity to produce 10,000 medals each month; current monthly production is 7,640 medals. The company
normally charges $260 per medal. Variable costs and fixed costs for the current activity level follow:
Current
Product Costs
Variable costs
Manufacturing
Labor
Material
Marketing
Total variable costs
Fixed costs
Manufacturing
Marketing
Total fixed costs
$ 382,000
305,600
191,000
$ 878,600
$ 282,000
232,000
$ 514,000
$ 1,392,600
Total costs
Award Plus has just received a special one-time order for 2,360 medals at $150 per medal. For this particular order, no
variable marketing costs will be incurred. Cathy Senna, a management accountant with Award Plus, has been assigned
the task of analyzing this order and recommending whether the company should accept or reject it. After examining
the costs, Senna suggested to her supervisor, Gerard LePenn, who is the controller, that they request competitive bids
from vendors for the raw materials because the current quote seems high. LePenn insisted that the prices are in line
with those of other vendors and told her that she was not to discuss her observations with anyone else. Senna later
discovered that LePenn is a brother-in-law of the owner of the current raw materials supply vendor.
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