Alpena Corporation manufactures smartphone and tablet cases. The following is the cost of each unit. $ 8.15 3.75 1.75 10.10 $23.75 Materials Labor Variable overhead Fixed overhead ($1,515,000 per year; 150,000 units per year) Total Decatur Devices has approached Alpena with an offer to buy 3,000 cases at a price of $19.40 each for its new specialty tablet designed for health care workers. The regular price of an Alpena case is $34.50. Alpena has the total capacity to produce 180,000 units without increasing its fixed overhead. Decatur Devices requires that each case use its branding, which requires a more expe embossing step. This will result in an additional $3.65 per case labor cost. The material cost of of the Decatur case will be the sam for the current models. The Decatur order will also require a one-time rental of embossing equipment for $3,381. Required: a. Prepare a schedule to show the impact of filling the Decatur Devices order on Alpena's profits for the year. b. Would you recommend that Alpena accept the order? c. Considering only profit, determine the minimum quantity of cases in the special order that would make it profitable, assuming capacity is available. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a schedule to show the impact of filling the Decatur Devices order on Alpena's profits for the year. (Enter your answers in thousands rounded to 1 decimal place. (i.e., 5,400,400 should be entered as 5,400.4). Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) Sales revenue Less variable costs: Materials Labor Variable overhead Total variable cost Required C Contribution margin Less: Fixed costs Status Quo 150,000 Units $ $ (All Costs in Thousands of Dollars) 5,175.0 1,222 5 562 5 262.5 2,047.5 Alternative 153,000 Units $ 0.0 Difference
Alpena Corporation manufactures smartphone and tablet cases. The following is the cost of each unit. $ 8.15 3.75 1.75 10.10 $23.75 Materials Labor Variable overhead Fixed overhead ($1,515,000 per year; 150,000 units per year) Total Decatur Devices has approached Alpena with an offer to buy 3,000 cases at a price of $19.40 each for its new specialty tablet designed for health care workers. The regular price of an Alpena case is $34.50. Alpena has the total capacity to produce 180,000 units without increasing its fixed overhead. Decatur Devices requires that each case use its branding, which requires a more expe embossing step. This will result in an additional $3.65 per case labor cost. The material cost of of the Decatur case will be the sam for the current models. The Decatur order will also require a one-time rental of embossing equipment for $3,381. Required: a. Prepare a schedule to show the impact of filling the Decatur Devices order on Alpena's profits for the year. b. Would you recommend that Alpena accept the order? c. Considering only profit, determine the minimum quantity of cases in the special order that would make it profitable, assuming capacity is available. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a schedule to show the impact of filling the Decatur Devices order on Alpena's profits for the year. (Enter your answers in thousands rounded to 1 decimal place. (i.e., 5,400,400 should be entered as 5,400.4). Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) Sales revenue Less variable costs: Materials Labor Variable overhead Total variable cost Required C Contribution margin Less: Fixed costs Status Quo 150,000 Units $ $ (All Costs in Thousands of Dollars) 5,175.0 1,222 5 562 5 262.5 2,047.5 Alternative 153,000 Units $ 0.0 Difference
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
6
Transcribed Image Text:Alpena Corporation manufactures smartphone and tablet cases. The following is the cost of each unit.
Materials
Labor
Variable overhead
Fixed overhead ($1,515,000 per year; 150,000 units per year)
Total
Decatur Devices has approached Alpena with an offer to buy 3,000 cases at a price of $19.40 each for its new specialty tablet
designed for health care workers. The regular price of an Alpena case is $34.50. Alpena has the total capacity to produce 180,000
units without increasing its fixed overhead. Decatur Devices requires that each case use its branding, which requires a more expensive
embossing step. This will result in an additional $3.65 per case labor cost. The material cost of of the Decatur case will be the same as
for the current models. The Decatur order will also require a one-time rental of embossing equipment for $3,381.
Required:
a. Prepare a schedule to show the impact of filling the Decatur Devices order on Alpena's profits for the year.
b. Would you recommend that Alpena accept the order?
c. Considering only profit, determine the minimum quantity of cases in the special order that would make it profitable, assuming
capacity is available.
Complete this question by entering your answers in the tabs below.
Required A Required B
Sales revenue
Less variable costs:
Prepare a schedule to show the impact of filling the Decatur Devices order on Alpena's profits for the year. (Enter your
answers in thousands rounded to 1 decimal place. (i.e., 5,400,400 should be entered as 5,400.4). Select option "higher" or
"lower", keeping Status Quo as the base. Select "none" if there is no effect.)
Materials
Labor
Variable overhead
Total variable cost
Required C
Contribution margin
Less: Fixed costs
Operating profit (loss)
Status Quo
150,000 Units
$
$
(All Costs in Thousands of Dollars)
Alternative
153,000 Units
5,175.0
1,222 5
562 5
262.5
2,047.5
$ 8.15
3.75
1.75
10.10
$23.75
$
0.0
Difference
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education