Alton Incorporated is working at full production capacity producing 28.000 units of a unique product, Manufacturing costs per unit forthe product are as followsDirect materialsDirect laborManufacturing overheadTotal manufacturing cost per unitThe per-unit manufacturing overhead cost is based on a $4 variable cost per unit and $168.000 fixed costs. The nonmanufacturingcosts, all variable, are $10 per unit, and the sales price is $42 per unit.Req IA59Sports Headquarters Company (SHC) has asked Alton to produce 6.600 units of a modification of the new product. This modificationwould require the same manufacturing processes. However, because of the nature of the proposed sale, the estimatednonmanufacturing costs per unit are only $5 (not $10) Alton would sell the modified product to SHC for $32 per unit8Required1-a. Calculate the contribution margin for 6,600 units for both the current and special order.1-b. Should Alton produce the special order for SHC?2. Suppose that Alton Incorporated had been working at less than full capacity to produce 23,200 units of the product when SHCmade the offer. What is the minimum price per unit that Alton should accept for the modified product under these conditions?Complete this question by entering your answers in the tabs below.CurrentSpecial order18$ 27Reg 2ContributionMarginReg 1BCalculate the contribution margin for 6,600 units for both the current and special order.

Contribution Margin:A financial indicator called contribution margin aids companies in determining…

Answered: Alton incorporated is working at full…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 36,000 Rets per year. Costs associated with this level of production and sales are given below: Unit Total Direct materials $ 20 $ 720,000 Direct labor 10 360,000 Variable manufacturing overhead 3 108,000 Fixed manufacturing overhead 9 324,000 Variable selling expense 2 72,000 Fixed selling expense 6 216,000 Total cost $ 50 $ 1,800,000 The Rets normally sell for $55 each. Fixed manufacturing overhead is $324,000 per year within the range of 31,000 through 36,000 Rets per year. Required: 1. Assume that due to a recession, Polaski Company expects to sell only 31,000 Rets through regular channels next year. A large retail chain has offered to purchase 5,000 Rets if Polaski is willing to accept a 16% discount off the regular price. There would be no sales commissions on this order; thus, variable selling expenses would be slashed by…
Cane Company manufactures two products called Alpha and Beta that sell for $150 and $105, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 107,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 30 $ 10 Direct labor 25 20 Variable manufacturing overhead 12 10 Traceable fixed manufacturing overhead 21 23 Variable selling expenses 17 13 Common fixed expenses 20 15 Total cost per unit $ 125 $ 91 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 1. Assume that Cane expects to produce and sell 55,000 Alphas during the current year. A supplier has offered to manufacture and deliver 55,000 Alphas to Cane for a price of $100 per unit. What is the financial…
Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 32,000 Rets per year. Costs associated with this level of production and sales are given below: Unit Total Direct materials $ 20 $ 640,000 Direct labor 6 192,000 Variable manufacturing overhead 3 96,000 Fixed manufacturing overhead 9 288,000 Variable selling expense 4 128,000 Fixed selling expense 6 192,000 Total cost $ 48 $ 1,536,000 The Rets normally sell for $53 each. Fixed manufacturing overhead is $288,000 per year within the range of 23,000 through 32,000 Rets per year. Required: Assume due to a recession, Polaski Company expects to sell only 23,000 Rets through regular channels next year. A large retail chain offered to purchase 9,000 Rets if Polaski will accept a 16% discount off the regular price. There would be no sales commissions on this order; thus, variable selling expenses would be slashed by 75%. However, Polaski Company…
Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 48,000 Rets per year. Costs associated with this level of production and sales are given below: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense Total cost Unit $ 25 8 3 7 2 6 $ 51 $ 2,448,000 Total $ 1,200,000 384,000 144,000 336,000 96,000 288,000 The Rets normally sell for $56 each. Fixed manufacturing overhead is $336,000 per year within the range of 42,000 through 48,000 Rets per year. Required: 1. Assume that due to a recession, Polaski Company expects to sell only 42,000 Rets through regular channels next year. A large retail chain has offered to purchase 6,000 Rets if Polaski is willing to accept a 16% discount off the regular price. There would be no sales commissions on this order; thus, variable selling expenses would be slashed by 75%. However, Polaski Company…
Haresh
Public accounting businesses may achieve adequate professional standards only if they have an effective quality control and monitoring system in place.
Cane Company manufactures two products called Alpha and Beta that sell for $155 and $115, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 110,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 24 $ 12 Direct labor 23 26 Variable manufacturing overhead 22 12 Traceable fixed manufacturing overhead 23 25 Variable selling expenses 19 15 Common fixed expenses 22 17 Total cost per unit $ 133 $ 107 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. Required: 1. What is the total amount of traceable fixed manufacturing overhead for each of the two products? what is the alpha and beta
Cane Company manufactures two products called Alpha and Beta that sell for $155 and $115, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 110,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 24 $ 12 Direct labor 23 26 Variable manufacturing overhead 22 12 Traceable fixed manufacturing overhead 23 25 Variable selling expenses 19 15 Common fixed expenses 22 17 Total cost per unit $ 133 $ 107 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 2. What is the company’s total amount of common fixed expenses? 3. Assume that Cane expects to produce and sell 87,000 Alphas during the current year. One of Cane's sales representatives has found a…
Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 32,000 Rets per year. Costs associated with this level of production and sales are given below: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense Total cost Unit $ 15 6 3 5 160,000 4 128,000 192,000 6 $ 39 $ 1,248,000 Total $ 480,000 192,000 96,000 The Rets normally sell for $44 each. Fixed manufacturing overhead is $160,000 per year within the range of 25,000 through 32,000 Rets per year. Required: 1. Assume that due to a recession, Polaski Company expects to sell only 25,000 Rets through regular channels next year. A large retail chain has offered to purchase 7,000 Rets if Polaski is willing to accept a 16% discount off the regular price. There would be no sales commissions on this order; thus, variable selling expenses would be slashed by 75%. However, Polaski Company…

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