A special order has been received by Fairview Electronics for a sale of 3,500 televisions to an overseas customer. The only selling costs that would be incurred on this order would be $14 per television for shipping. Fairview Electronics is now selling 9,000 televisions through regular distributors each period. What should be the minimum selling price per television in negotiating a price for this special order? - $214 - - $220 - $340 - $200

A special order has been received by Fairview Electronics for a sale of 3,500 televisions to an overseas customer. The only selling costs that would be incurred on this order would be $14 per television for shipping. Fairview Electronics is now selling 9,000 televisions through regular distributors each period. What should be the minimum selling price per television in negotiating a price for this special order? - $214 - - $220 - $340 - $200

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 13P: Deuce Sporting Goods manufactures a high-end model tennis racket. The company’s forecasted income...

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Deuce Sporting Goods manufactures a high-end model tennis racket. The company’s forecasted income statement for the year, before any special orders, is as follows: Fixed costs included in the forecasted income statement are $400,000 in manufacturing cost of goods sold and $200,000 in selling expenses. A new client placed a special order with Deuce, offering to buy 1,000 tennis rackets for $100.00 each. The company will incur no additional selling expenses if it accepts the special order. Assuming that Deuce has sufficient capacity to manufacture 1,000 more tennis rackets, by what amount would differential income increase (decrease) as a result of accepting the special order? (Hint: First compute the variable cost per unit relevant to this decision.)
Locust Software sells computer training packages to its business customers at a price of $101. The cost of production (in present value terms) is $99. Locust sells its packages on terms of net 30 and estimates that about 7% of all orders will be uncollectible. An order comes in for 30 units. The interest rate is 1.3% per month. Required: a-1. Calculate the profit or loss if this is a one-time order and sale will not be made unless credit is extended a-2. Should the firm extend credit if this is a one-time order? b. What is the break-even probability of collection? c-1. Now suppose that if the customer pays this month's bill, they will place an identical order in each month indefinitely and can be safely assumed to pose no risk of default.Calculate the present value of the sale. c-2. Should credit be extended? d. What is the break-even probability of collection in the repeat-sales case? Complete this question by entering your answers in the tabs below. Req A1 A2 and Req C1 C2 and B D…
Locust Software sells computer training packages to its business customers at a price of $101. The cost of production (in present value terms) is $99. Locust sells its packages on terms of net 30 and estimates that about 7% of all orders will be uncollectible. An order comes in for 30 units. The interest rate is 1.3% per month. Required: a-1. Calculate the profit or loss if this is a one-time order and sale will not be made unless credit is extended a-2. Should the firm extend credit if this is a one-time order? b. What is the break-even probability of collection? c-1. Now suppose that if the customer pays this month's bill, they will place an identical order in each month indefinitely and can be safely assumed to pose no risk of default.Calculate the present value of the sale. c-2. Should credit be extended? d. What is the break-even probability of collection in the repeat-sales case? Complete this question by entering your answers in the tabs below. Req A1 A2 and Req C1 C2 and в D…
ACME Company purchases for resale 1,000 widgets for $64 each. At year- end, the replacement cost is $63 per widget, the estimated selling price is $68 per widget, the disposal cost is $7 per widget, and the estimated markup is $10 per widget.[General Account] If ACME uses LCM costing by item, at what amount will the widgets be reported on the balance sheet? a. $63,000 b. $51,000 c. $64,000 d. $62,500 e. $61,000
Macrovision sells a variety of satellite TV packages. The popular $600 Basic Package includes a hardware component (consisting of a satellite dish and receiver) along with a twelve-month subscription to 130 TV channels. Macrovision sells the hardware component without a subscription for $180, and sells a twelve-month subscription to the same 130 channels without hardware for $540/year. Let’s account for the sale of one Basic Package for $600 on January 1, 2018. Required: 1. Identify the performance obligations in the Basic Package contract, and determine when revenue for each should be recognized. 2. For the single Basic Package sold on January 1, 2018, allocate the $600 transaction price to the performance obligations in the contract, and prepare a journal entry to record the sale (ignoring any entry to record the reduction in inventory and the corresponding cost of goods sold). 3. Prepare any journal entry necessary to record revenue related to the same contract on January 31,…
Bluebird Mfg has received a special one time order for 15000 bird feeders at $3.20 per unit. Bluebird currently produces and sells 75000 units at $7.20 each. This level represents 80% of its capacity. These bird feeders would be marketed under the wholesaler's name and would not affect bluebird sales accepts this additional business, the effect on net income will be?
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The Tick Tock Clock Company sells a particular clock for $75. The variable costs are $15 per clock and the breakeven point is 230 clocks. The company expects to sell 280 clocks this year. If the company actually sells 355 clocks, what effect would the sale of additional 75 clocks have on operating income? Explain your answer The sale of an additional 75 dlocks would aller an. operating income by the amount of The total effect would amount to 4
Wok Around the Clock, Inc., sells specialty woks. In the current year it expects to incur $840,000 in variable costs and $120,000 in fixed costs to make and sell 10,000 woks at $100 each.If Wok Around the Clock accepts a special order from Hard Wok Cafe to purchase 1,000 woks at $80 each, how much would it make or lose on this special order?
Kirby company can manufacture a product for $52 per unit ($36 variable and $16 fixed), a foreign wholesale offers to purchase 10,000 units at $42 each although normal selling price is $76 per unit. If the order is accepted Kirby would incur special shipping costs of $4 per unit. Kirby has sufficient unused capacity to product the 10,000 units. If the special order is acdpeee what will be the effect on net income?
Welch Manufacturing is approached by a European customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. Welch Manufacturing has a policy of adding a 10% markup to full costs and currently has excess capacity. The per unit data shown in the table apply for sales to regular customers. (Click the icon to view the table.) For Welch Manufacturing, what is the minimum acceptable price of this one-time-only special order? A. $55 B. $40 C. $100 D. $66 E. $86 Table Variable costs: Direct materials Direct labour Manufacturing overhead Sales commission Fixed costs: Manufacturing overhead Marketing costs Total costs Markup (10%) Estimated selling price $40 20 25 15 100 20 220 22 $242 X
Assume again that Andretti Company has sufficient capacity to produce 123,200 Daks each year. A customer in a foreign market wants to purchase 35,200 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $2.70 per unit and an additional $28,160 for permits and licenses. The only selling costs that would be associated with the order would be $1.60 per unit shipping cost. What is the break-even price per unit on this order? (Round your answers to 2 decimal places.)