Assume a company manufactures many products, one of which normally sells for $48 per unit. The company's accounting system reports the following unit product cost for this productPer UnitDirect materials$ 18Direct labor12Manufacturing overhead10Total cost$ 40The company estimates that $3 of Its manufacturing overhead varles with respect to the number of units produced. The remainder of its overhead Is fixed and unaffected by the volume of units produced within the relevant rangeA customer has approached the company with an offer to buy 300 units of a customized verslon of the product mentioned above for $39. The company can fulfill this order using existing manufacturing capacity. To accommodate thecustomer's desired product design, the company would Incur additional direct materlals cost per unit of $3. It would also have to buy a speclal tool for $600 that has no other use or resale value after the special order Is completed.Assuming that accepting this order will not have any effect on sales to other customers, what Is the financial advantage (disadvantage) of accepting the special order?Multiple Cholce$(300)$(1,800)$900$300

In cost accounting the cost can be categorized into fixed or static and variable, fixed costs…

Assume a company manufactures many products, one of which normally sells for $48 per unit. The company's accounting system reports the following unit product cost for this product Per Unit Direct materials $ 18 Direct labor 12 Manufacturing overhead 10 Total cost $ 40 The company estimates that $3 of its manufacturing overhead varies with respect to the number of units produced. The remainder of its overhead is fixed and unaffected by the volume of units produced within the relevant range A customer has approached the company with an offer to buy 300 units of a customized version of the product mentioned above for $39 The company can fulfil this order using extsting manufacturing capacity. To accommodate the customer's desired product design, the company would incur additional direct materials cost per unit of $3. It would also have to buy a special tool for $600 that has no other use or resale value after the special order is completed Assuming that accepting this order will not have any effect on sales to other customers, what is the financial advantage (disadvantage) of accepting the special order? Multiple Choice S(300) S(L800) $900 $300 O O O O

Assume a company manufactures many products, one of which normally sells for $48 per unit. The company's accounting system reports the following unit product cost for this product Per Unit Direct materials $ 18 Direct labor 12 Manufacturing overhead 10 Total cost $ 40 The company estimates that $3 of its manufacturing overhead varies with respect to the number of units produced. The remainder of its overhead is fixed and unaffected by the volume of units produced within the relevant range A customer has approached the company with an offer to buy 300 units of a customized version of the product mentioned above for $39 The company can fulfil this order using extsting manufacturing capacity. To accommodate the customer's desired product design, the company would incur additional direct materials cost per unit of $3. It would also have to buy a special tool for $600 that has no other use or resale value after the special order is completed Assuming that accepting this order will not have any effect on sales to other customers, what is the financial advantage (disadvantage) of accepting the special order? Multiple Choice S(300) S(L800) $900 $300 O O O O

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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[The following information applies to the questions displayed below.] Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct material: 4 pounds at $8.00 per pound \table[[{fcbfd2c16-e6db-4579-9aec-24d6bce88229} \table[[32.00],[32.00],[12.00]]],[$76.00
Koontz Company manufactures two models of industrial components-a Basic model and an Advanced Model. The company considers all of its manufacturing overhead costs to be fixed and it uses plantwide manufacturing overhead cost allocation based on direct labor-hours. Koontz's controller prepared the segmented income statement that is shown below for the most recent year (he allocated selling and administrative expenses to products based on sales dollars): Basic Advanced Total Number of units produced and sold 20,000 10,000 30,000 $ 5,000,000 3,650,000 1,350,000 1,200,000 $3,000,000 $2,000,000 1,350,000 650,000 480,000 Sales Cost of goods sold Gross margin Selling and administrative expenses 2,300,000 700,000 720,000 (20,000) Net operating income (loss) $4 $4 170,000 150,000 Direct laborers are paid $20 per hour. Direct materials cost $40 per unit for the Basic model and $60 per unit for the Advanced model. Koontz is considering a change from plantwide overhead allocation to a departmental…
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