Complete this question by entering your answers in the tabs below.Required A Required BPrepare a schedule to show the impact of filling the Simpson order on Andreasen's profits for the year. (Enter your answthousands 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 revenueLess variable costs:MaterialsLaborVariable overheadTotal variable costContribution marginLess: Fixed costsOperating profit (loss)Required CYes(All Costs in Thousands of Dollars)Alternative119,400 UnitsStatus Quo110,000 Units$ONORequired A Required B0.0 $units Andreasen Corporation manufactures thermostats for office buildings. The following is the cost of each unit.MaterialsLaborVariable overheadFixed overhead ($1,980,000 per year; 110,000 units per year)Total$36.0014.004.0018.00$72.00Simpson Company has approached Andreasen with an offer to buy 9,400 thermostats at a price of $60 each. The regular price is$100. Andreasen has the capacity to produce the 9,400 additional units without affecting its current production of 110,000 units.Simpson requires that each unit use its branding, which requires a more expensive label, resulting in an additional $2.00 per unitmaterial cost. The labor cost of affixing the label will be the same as for the current models. The Simpson order will also require a one-time rental of packaging equipment for $34,600.Required:a. Prepare a schedule to show the impact of filling the Simpson order on Andreasen's profits for the year.b. Do you agree with the decision to accept the special order?c. Considering only profit, determine the minimum quantity of thermostats in the special order that would make it profitable, assumingcapacity is available.

Contribution margin per unit=Selling price-Variable cost per unit Break-even point units=Fixed…

Answered: Andreasen Corporation manufactures…

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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am. 100.
Scott Corporation produces a part for use in the production of one of its products. The per-unit costs associated with the annual production of 1,000 units of this part are as follows: Direct Materials $10.50 $24.00 Direct labor Variable factory overhead $5.50 Fixed factory overhead $12.00 Total Costs $52.00 $5,000 of the fixed factory overhead costs associated with the production of this product are common fixed costs. Larson Company has offered to sell 1,000 units of the same part to Scott Corporation for $42 per unit. Scott should: Select one: a. buy the part, because this would save $10.00 per unit. X b. buy the part, because this would save the company $5,000 annually. c. make the part, because this would save the company $5,000 annually. d. make the part, because this would save $2.00 per unit.
Brightstone Tire and Rubber Company has capacity to produce 153,000 tires. Brightstone presently produces and sells 117,000 tires for the North American market at a price of $91 per tire. Brightstone is evaluating a special order from a European automobile company, Euro Motors. Euro is offering to buy 18,000 tires for $75.15 per tire. Brightstone's accounting system indicates that the total cost per tire is as follows: Direct materials $35 Direct labor 13 Factory overhead (60% variable) 21 Selling and administrative expenses (40% variable) 18 Total $87 Brightstone pays a selling commission equal to 5% of the selling price on North American orders, which is included in the variable portion of the selling and administrative expenses. However, this special order would not have a sales commission. If the order was accepted, the tires would be shipped overseas for an additional shipping cost of $5 per tire. In addition, Euro has made the order conditional on receiving European safety…
Supler Corporation produces a part used in the manufacture of one of its products. The unit product cost is $21, computed as follows: Direct materials $ 8 Direct labor 7 Variable manufacturing overhead 1 Fixed manufacturing overhead 5 Unit product cost $ 21 An outside supplier has offered to provide the annual requirement of 5,500 of the parts for only $13 each. The company estimates that 60% of the fixed manufacturing overhead cost above could be eliminated if the parts are purchased from the outside supplier. Assume that direct labor is an avoidable cost in this decision. Based on these data, the costs saved by purchasing the units of purchasing the parts from the outside supplier would be: Multiple Choice $1 per unit on average ($8) per unit on average $6 per unit on average ($1) per unit on average
Zion Manufacturing had always made its components in-house. However, Bryce Component Works had recently offered to supply one component, K2, at a price of $13 each. Zion uses 4,400 units of Component K2 each year. The cost per unit of this component is as follows: Direct materials Direct labor Variable overhead Fixed overhead Total $7.84 2.84 1.67 4.00 $16.35 The fixed overhead is an allocated expense; none of it would be eliminated if production of Component K2 stopped. Required: 1. What are the alternatives facing Zion Manufacturing with respect to production of Component K2? 2. List the relevant costs for each alternative. If required, round your answers to the nearest cent. Total Relevant Cost Make per unit Buy per unit Differential Cost to Make per unit
Steve company produces 30000 units of parts each year for use on its production line. The cost per units of the part S6: Direct material $3.60 Direct labor $10.00 Variable manufacturing overhead $2.40 Fixed manufacturing overhead $9.00 Total cost per part$25.00 An outside supplier has offered to sell 30000 units of the part each year at a product company at $21.00 per part. If the products company accepts this offer, the facilities now being used to manufacturer the parts could be rented by another company at the annual rent of $80,000.00. However, the products have determined that two-thirds of the fixed manufacturing overhead being applied to the part would continue even if the part S6 was purchased by an outside supplier. What is the advantage or disadvantage of accepting the outside supplier's offer? and how much ?
Every year Blue Industries manufactures 7,300 units of part 231 for use in its production cycle. The per unit costs of part 231 are as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total (a) $3.00 Total relevant cost to make $ 11.00 Net relevant cost to buy $ 8.00 Cullumber, Inc., has offered to sell 7,300 units f part 231 to Blue for $33 per unit. If Blue accepts Cullumber's offer, its freed-up facilities could be used to earn $10,700 in contribution margin by manufacturing part 240. In addition, Blue would eliminate 50% of the fixed overhead applied to part 231. 10.00 $32.00 Calculate total relevant cost to make and net cost to buy.
Frannie Fans currently manufactures ceiling fans that include remotes to operate them. The current cost to manufacture 10,320 remotes is as follows: Direct materials Direct labor Variable overhead Fixed overhead Total Cost $ 67,080 $ 56,760 $ 30,960 $ 51,600 $ 206,400 Frannie is approached by Lincoln Company, which offers to make the remotes for $18 per unit. Required: 1. Compute the difference in cost per unit between making and buying the remotes if none of the fixed costs can be avoided. What is the change in net income, if Frannie Fans buys the remotes? 2. Compute the difference in cost per unit between making and buying the remotes if $20,640 of the fixed costs can be avoided. What is the change in net income, if Frannie Fans buys the remotes? 3. What is the change in net income if fixed cost of $20,640 can be avoided and Frannie could rent out the factory space no longer in use for $20,640?
a) Almond Delites manufactures various types of biscuits. FMF Biscuits Ltd has approached Almond Delites with a proposal to sell the company its top-selling biscuit at a price of $22 000 for 20 000 units. The costs shown are associated with the production of 20 000 units of almond biscuits: Direct materials: $12,000 Direct labor: $5,000 Variable overhead: $8,000 Fixed overhead: $25,000 The manufacturing overhead consists of $2 000 of variable costs, with the balance being allocated to fixed costs. Assume that 40% of the fixed costs would be avoidable if the almond biscuits were purchased externally rather than produced internally. Required: i)Should Almond Delites make or buy the almond biscuit? ii) What qualitative factors should Almond Delites consider before making its decision?
Steering produces a hard disk drive that sells for $175 per unit. The cost of producing 25,000 drives in the prior year was: Direct material Direct labor Variable overhead Fixed overhead Total cost $ 700,000 475,000 225,000 1,500,000 $ 2.900.000 At the start of the current year, the company received an order for 2,940 drives from a computer company in China. Management of Steering has mixed feelings about the order. On one hand, they welcome the order because they currently have excess capacity. Also, this is the company's first international order. On the other hand, the company in China is willing to pay only $122 per unit. What will be the effect on profit of accepting the order? (Enter decrease in profit using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).)

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