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Alton Incorporated is working at full production capacity producing 24,000 units of a unique product. Manufacturing costs per unit for the product are as follows: Direct materials Direct labor Manufacturing overhead Total manufacturing cost per unit $ 9 8 10 $ 27 The per-unit manufacturing overhead cost is based on a $6 variable cost per unit and $96,000 fixed costs. The nonmanufacturing costs, all variable, are $8 per unit, and the sales price is $47 per unit. Sports Headquarters Company (SHC) has asked Alton to produce 5,500 units of a modification of the new product. This modification would require the same manufacturing processes. However, because of the nature of the proposed sale, the estimated nonmanufacturing costs per unit are only $4 (not $8). Alton would sell the modified product to SHC for $37 per unit. Required 1-a. Calculate the contribution margin for 5,500 units for both the current and special order. 1-b. Should Alton produce the special order for SHC? 2. Suppose that Alton Incorporated had been working at less than full capacity to produce 19,600 units of the product when SHC made the offer. What is the minimum price per unit that Alton should accept for the modified product under these conditions? Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2 Calculate the contribution margin for 5,500 units for both the current and special order. Current Special order Contribution Margin

Alton Incorporated is working at full production capacity producing 24,000 units of a unique product. Manufacturing costs per unit for the product are as follows: Direct materials Direct labor Manufacturing overhead Total manufacturing cost per unit $ 9 8 10 $ 27 The per-unit manufacturing overhead cost is based on a $6 variable cost per unit and $96,000 fixed costs. The nonmanufacturing costs, all variable, are $8 per unit, and the sales price is $47 per unit. Sports Headquarters Company (SHC) has asked Alton to produce 5,500 units of a modification of the new product. This modification would require the same manufacturing processes. However, because of the nature of the proposed sale, the estimated nonmanufacturing costs per unit are only $4 (not $8). Alton would sell the modified product to SHC for $37 per unit. Required 1-a. Calculate the contribution margin for 5,500 units for both the current and special order. 1-b. Should Alton produce the special order for SHC? 2. Suppose that Alton Incorporated had been working at less than full capacity to produce 19,600 units of the product when SHC made the offer. What is the minimum price per unit that Alton should accept for the modified product under these conditions? Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2 Calculate the contribution margin for 5,500 units for both the current and special order. Current Special order Contribution Margin

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter2: Building Blocks Of Managerial Accounting
Section: Chapter Questions
Problem 5EA: Rose Company has a relevant range of production between 10,000 and 25.000 units. The following cost...
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Alton Incorporated is working at full production capacity producing 24,000 units of a unique product. Manufacturing costs per unit for the product are as follows: Direct materials Direct labor Manufacturing overhead Total manufacturing cost per unit $ 9 8 10 $ 27 The per-unit manufacturing overhead cost is based on a $6 variable cost per unit and $96,000 fixed costs. The nonmanufacturing costs, all variable, are $8 per unit, and the sales price is $47 per unit. Sports Headquarters Company (SHC) has asked Alton to produce 5,500 units of a modification of the new product. This modification would require the same manufacturing processes. However, because of the nature of the proposed sale, the estimated nonmanufacturing costs per unit are only $4 (not $8). Alton would sell the modified product to SHC for $37 per unit. Required 1-a. Calculate the contribution margin for 5,500 units for both the current and special order. 1-b. Should Alton produce the special order for SHC? 2. Suppose that Alton Incorporated had been working at less than full capacity to produce 19,600 units of the product when SHC made the offer. What is the minimum price per unit that Alton should accept for the modified product under these conditions? Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2 Calculate the contribution margin for 5,500 units for both the current and special order. Current Special order Contribution Margin
Transcribed Image Text:Alton Incorporated is working at full production capacity producing 24,000 units of a unique product. Manufacturing costs per unit for the product are as follows: Direct materials Direct labor Manufacturing overhead Total manufacturing cost per unit $ 9 8 10 $ 27 The per-unit manufacturing overhead cost is based on a $6 variable cost per unit and $96,000 fixed costs. The nonmanufacturing costs, all variable, are $8 per unit, and the sales price is $47 per unit. Sports Headquarters Company (SHC) has asked Alton to produce 5,500 units of a modification of the new product. This modification would require the same manufacturing processes. However, because of the nature of the proposed sale, the estimated nonmanufacturing costs per unit are only $4 (not $8). Alton would sell the modified product to SHC for $37 per unit. Required 1-a. Calculate the contribution margin for 5,500 units for both the current and special order. 1-b. Should Alton produce the special order for SHC? 2. Suppose that Alton Incorporated had been working at less than full capacity to produce 19,600 units of the product when SHC made the offer. What is the minimum price per unit that Alton should accept for the modified product under these conditions? Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2 Calculate the contribution margin for 5,500 units for both the current and special order. Current Special order Contribution Margin
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