True answer? ? General Accounting Atlas Manufacturing produces a single product that sells for $75 perunit. At the current production level of 10,000 units, variable costsare $28 per unit and fixed costs are $22 per unit. Atlas received aspecial order from Beta Corp for 3,000 units at $35 per unit. For thisspecial order, the variable cost would be $4 less per unit due to bulkmaterial purchases. However, Atlas needs to purchase a custom moldfor $18,500 that will have no value after completing this order.Assuming Atlas has a capacity of 15,000 units, by how much will netoperating income increase (or decrease) if the special order isaccepted?A. $1,500 increaseB. $2,900 decreaseC. $3,500 decreaseD. $4,100 decrease

Step 1: Define Special Order DecisionA special order decision evaluates whether a company should…

Answered: Atlas Manufacturing produces a single…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 4EB: Dimitri Designs has capacity to produce 30,000 desk chairs per year and is currently selling all...

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Oat Treats manufactures various types of cereal bars featuring oats. Simmons Cereal Company has approached Oat Treats with a proposal to sell the company its top selling oat cereal bar at a price of $27,500 for 20,000 bars. The costs shown are associated with production of 20,000 oat bars currently. The manufacturing overhead consists of $3,000 of variable costs with the balance being allocated to fixed costs. Should Oat Treats make or buy the oat bars?
Jansen Crafters has the capacity to produce 50,000 oak shelves per year and is currently selling 44,000 shelves for $32 each. Cutrate Furniture approached Jansen about buying 1,200 shelves for bookcases it is building and is willing to pay $26 for each shelf. No packaging will be required for the bulk order. Jansen usually packages shelves for Home Depot at a price of $1.50 per shell. The $1.50 per-shelf cost is included in the unit variable cost of $27, with annual fixed costs of $320.000. However, the $130 packaging cost will not apply in this case. The fixed costs will be unaffected by the special order and the company has the capacity to accept the order. Based on this information, what would be the profit if Jansen accepts the special order? A. Profits will decrease by $1,200. B. Profits will increase by $31,200. C. Profits will increase by $600. D. Profits will increase by $7,200.
Shelby Industries has a capacity to produce 45.000 oak shelves per year and is currently selling 40,000 shelves for $32 each. Martin Hardwoods has approached Shelby about buying 1,200 shelves for a new project and is willing to pay $26 each. The shelves can be packaged in bulk; this saves Shelby $1.50 per shelf compared to the normal packaging cost. Shelves have a unit variable cost of $27 with fixed costs of $350,000. Because the shelves dont require packaging, the unit variable costs for the special order will drop from $27 per shelf to $25.50 per shelf. Shelby has enough idle capacity to accept the contract. What is the minimum price per shelf that Shelby should accept for this special order?
Reubens Deli currently makes rolls for deli sandwiches it produces. It uses 30,000 rolls annually in the production of deli sandwiches. The costs to make the rolls are: A potential supplier has offered to sell Reuben the rolls for $0.90 each. If the rolls are purchased, 30% of the fixed overhead could be avoided, If Reuben accepts the offer, what will the effect on profit be?
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Finn Flying Company produces and sells kites for $51. The company has the capacity to produce 10,600 kites each period. At capacity, the costs assigned to each unit are as follows: Unit-level costs $31 Product-level costs $16 Facility-level costs $11 The company has received a special order for 230 kites. Assuming that no sales to regular customers will be lost if the order is accepted, at what selling price will the company be indifferent between accepting and rejecting the special order? $70 $60 $31 $65
The Mighty Music Company produces and sells a desktop speaker for $200. The company has the capacity to produce 60,000 speakers each period. At capacity, the costs assigned to each unit are as follows: Unit-level costs Product-level costs Facility-level costs The company has received a special order for 11,000 speakers. If this order is accepted, the company will have to spend $20,000 on additional costs. Assuming that no sales to regular customers will be lost if the order is accepted, at what selling price will the company be indifferent between accepting and rejecting the special order? Multiple Choice O O $96.82 $146.82 $104.32 $95 $25 $15 $107.32
Wheel Company makes a product, K9. It has a production capacity of 1,000 units, and it can sell all of 1,000 units to its regular customers. The regular selling price is $60 each. Wheel has received a request from Tom for a special order of 100 units of K9. This special order does not incur any variable selling cost. The following is the per-unit cost information: Variable manufacturing $18 Fixed manufacturing $20* Unit manufacturing cost $38 Variable selling $4 Fixed selling $8* Unit selling cost $12 Total cost $50 * based on production and sales of 1,000 units Whelel has received a speciar order from Tom (who is not a regular customer). He wants to buy 100 units at a discounted price. Wheell does not want the company's profit to decline by accepting the order from Tom. Then, Wheel has to charge at least _____ to Tom for each unit of K9. A. $18 B. $24 C. $46 D.…
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Rundle Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,300 containers follows. Unit-level materials. Unit-level labor Unit-level overhead Product-level costs* Allocated facility-level costs One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Rundle for $2.60 each. Required a. Calculate the total relevant cost. Should Rundle continue to make the containers? b. Rundle could lease the space it currently uses in the manufacturing process. If leasing would produce $11,600 per month, calculate the total avoidable costs. Should Rundle continue to make the containers? Answer is complete but not entirely correct. $ a. Total relevant cost a. Should Rundle continue to make the containers? b. Total avoidable cost b. Should Rundle continue to make the containers? 190.650,000 Yes $24,180,000 $ 5,200 6,100 4,000 7,800…
Carson Manufacturing, Inc., sells a single product for $34 per unit. At an operating level of 8,000 units, variable costs are $18 per unit and fixed costs $10 per unit. Carson has been offered a price of $18 per unit on a special order of 2,000 units by Big Mart Discount Stores, which would use its own brand name on the item. If Carson accepts the order, material cost will be $4 less per unit than for regular production. However, special stamping equipment costing $4,000 would be needed to process the order; the equipment would then be discarded. Assuming that volume remains within the relevant range, prepare an analysis of differential revenue and costs to determine whether Carson should accept the special order. Use a negative sign with answer to only indicate a loss from special order; otherwise do not use negative signs with your answers. Special Order Differential Analysis Differential revenue Answer Differential variable costs Answer Equipment cost Answer…
Special Order Plastic Pipe Company manufactures a variety of pipes, and has received a special one-time-only order from a new customer. Plastic Pipe has sufficient idle capacity to accept the special order to manufacture 1,200 16-foot lengths of pipe at a price of $11.00 per pipe. Plastic Pipe's normal selling price is $12.00 per 16-foot length. Variable manufacturing costs are $7.00 per pipe and fixed manufacturing costs are $1.00 per pipe. Plastic Pipe's variable selling expense for its normal line of pipes is $0.50 per pipe. What would the effect on Plastic Pipe's operating income be if the company accepted the special order? Plastic Pipe's operating income would increase ♦ by $4,200 Xif the order was accepted.

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