Bluebird Manufacturing hes received a special one-time order for 15,900 bird feedersfat $3.90 per unit. Bluebird currently produces and sells 75,000 units at $7.90 each. This level represents 80% of its capacity. Production costs these units are $4.40 per unit, which includes $3.15 of variable costs and $2.15 of fixed costs. If the special offer is accepted, there will be no incremental fixed cost. If Bluebird accepts this additional business, the effect on income vw he

Bluebird Manufacturing hes received a special one-time order for 15,900 bird feedersfat $3.90 per unit. Bluebird currently produces and sells 75,000 units at $7.90 each. This level represents 80% of its capacity. Production costs these units are $4.40 per unit, which includes $3.15 of variable costs and $2.15 of fixed costs. If the special offer is accepted, there will be no incremental fixed cost. If Bluebird accepts this additional business, the effect on income vw he

Name: Bluebird Manufacturing has received a special one-time order for 15,9
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Description: Bluebird Manufacturing has received a special one-time order for 15,900 bird feederslat $3.90 per unit. Bluebirdcurrently produces and sells 75,000 units at $7.90 each. This level represents 80% of its capacity. Production costs forthese units are $

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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Pardo Company produces a single product and has capacity to produce 195,000 units per month. Costs to produce its current monthly sales of 156,000 units follow. The normal selling price of the product is $132 per unit. A new customer offers to purchase 39,000 units for $61.20 per unit. If the special offer is accepted, there will be no additional fixed overhead and no additional fixed general and administrative costs. The special offer would not affect its normal sales. Direct materials Direct labor Variable overhead Fixed overhead Fixed general and administrative Totals (a) Compute the income from the special offer. (b) Should the company accept the special offer? Required A Required B Complete this question by entering your answers in the tabs below. Variable costs Per Unit $ 12.50 15.00 10.00 17.50 13.00 $ 68.00 SPECIAL OFFER ANALYSIS Compute the income for the special offer. (Round your "Per Unit" answers to 2 decimal places.) Contribution margin Fixed costs Costs at 156,000 Units…
Gelb Company currently manufactures 52,000 units per year of a key component for its manufacturing process. Variable costs are $7.35 per unit, fixed costs related to making this component are $67,000 per year, and allocated fixed costs are $82,500 per year. The allocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying this component from a supplier for $3.90 per unit. Calculate the total incremental cost of making 52,000 units and buying 52,000 units. Should it continue to manufacture the component, or should it buy this component from the outside supplier? Complete this question by entering your answers in the tabs below. Outside Supplier Calculate the total incremental cost of making 52,000 units. (Round "variable cost per unit" answers to 2 decimal places.) Incremental Costs to Make Relevant Amount per Unit Costs to Make Costs to Buy Variable cost per unit Fixed manufacturing costs Total incremental cost to make…
Kent Co. manufactures a product that sells for $57.00 and has variable costs of $34.00 per unit. Fixed costs are $253,000. Kent can buy a new production machine that will increase fixed costs by $24,200 per year, but will decrease variable costs by $5.00 per unit. Compute the contribution margin per unit if the machine is purchased.
Answer the following questions. Required 1. Deibler Computers makes 5,600 units of a circuit board, CB76, at a cost of $210 each. Variable cost per unit is $150, and fixed cost per unit is $60. HT Electronics offers to supply 5,600 units of CB76 for $185. If Deibler buys from HT, it will be able to save $25 per unit of fixed costs but continue to incur the remaining $35 per unit. Should Deibler accept HT's offer? Explain. 2. QT Manufacturing is deciding whether to keep or replace an old machine. It obtains the following information: (Click the icon to view the information.) QT Manufacturing uses straight-line depreciation. Ignore the time value of money and income taxes. Should QT replace the old machine? Explain. A Requirement 1. Deibler Computers makes 5,600 units of a circuit board, CB76, at a cost of $210 each. Variable cost per unit is $150, and fixed cost per unit is $60. HT Electronics offers to supply 5,600 units of CB76 for $185. If Deibler buys from HT, it will be able to…
Vista Company manufactures electronic equipment. It currently purchases the special switches used in each of its products from an outside supplier. The supplier charges Vista $5.20 per switch. Vista 's CEO is considering purchasing either machine A or machine B so the company can manufacture its own switches. The projected data are as follows: Machine A Machine B Annual fixed costs $ 582, 450 $ 792, 100 Variable cost per switch 1.67 0.75 Required: 1. For each machine, what is the minimum number of switches that Vista must make annually for total costs to equal outside purchase cost? 2. What volume level would produce the same total costs regardless of the machine purchased? 3. What is the most profitable alternative for producing 230,000 switches per year and what is the total cost of that alternative?
Yorkville sells a haircutter at $65 and each unit has variable cost of $25. Yorkville's fixed manufacturing costs are $80,000 when produces at its full capacity of 10,000 units and its its fixed cost per unit is $8 per unit. The company has an offer of 2,000 units at $30 each in an international market, which would not affect its current production but would increase the fixed cost by $5,000. How much is the incremental net income if it accepts the special order? Select one: a. $10,000 profit b. $6,000 loss c. $5,000 profit O d. $70,000 loss
Phillips HVAC and Plumbing has received a special one-time order for 1,500 faucets (units) at $5 per unit. Phillips currently produces and sells 7,500 units at $6.00 each. This level represents 75% of its capacity. Production costs for these units are $4.50 per unit, which includes $3.00 variable cost and $1.50 fixed cost. To produce the special order, a new machine needs to be purchased at a cost of $1,000 with a zero salvage value. Phillips management expects no other changes in costs as a result of the additional production. Should the Phillips accept the special order? 1)No, because additional production would exceed capacity. 2)Yes, because incremental costs exceed incremental revenues. 3)Yes, because incremental revenue exceeds incremental costs. 4)No, because incremental costs exceed incremental revenue. 5)No, because the incremental revenue is too low.
Waterways mass-produces a special connector unit that it normally sells for $3.60. It sells approximately 31,700 of these units each year. The variable costs for each unit are $2.10. A company in Canada that has been unable to produce enough of a similar connector to meet customer demand would like to buy 16,500 of these units at $2.40 per unit. The production of these units is near full capacity at Waterways, so to accept the offer from the Canadian company would require temporarily adding another shift to its production line. To do this would increase variable manufacturing costs by $0.30 per unit. However, variable selling costs would be reduced by $0.20 a unit.An irrigation company has asked for a special order of 2,100 of the connectors. To meet this special order, Waterways would not need an additional shift, and the irrigation company is willing to pay $3.00 per unit.
Happy Tea Company’s regular selling price for a case of its product is $6. Variable costs are $4 per case. Fixed costs total $1 per case based on 100,000 cases, and remain unchanged within the relevant range of 50,000 cases to total capacity of 200,000 cases. After sales of 80,000 cases were projected for the year, a special order was received for an additional 10,000 cases. What is the minimum selling price for the special order?
Lowwater Sailmakers manufactures sails for sailboats. The company has the capacity to produce 25,000 sails per year, but is currently producing and selling 20,.000 sails per year, The following information relates to current production. If a special sales order is accepted for 2,000 sails at a price of $87 per unit, and fixed costs increase by $20,000, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.) Sale price per unit $150 Variable costs unit: per Manufacturing Marketing and administrative $60 $20 Total fixed costs: Manufacturing Marketing and administrative S600,000 $200 000 Increase by S14,000 Decrease by S4,000 ) Decrease by S14,000 ) Decrease by S6,000 () Increase by S6,000 ()
Southwest Division offers its product to outside markets for $30. It incurs variable costs of $11 per unit and fixed costs of $37,50040,000 per month based on monthly production of 4,000 units. Northeast Division can acquire the product from an alternate supplier for $31 per unit or from Southwest Division for a transfer price of $30 plus $2 per unit in transportation costs. a. What are the costs and benefits of the alternatives available to Southwest Division and Northeast Division with respect to the transfer of Southwest Division's product? b. How would you answer change if Southwest Division had idle capacity sufficient to cover all of Northeast Division's needs?
You need 1,000 units of product Y per month. You currently make product Y in-house at a cost of $7/unit, which consists of $2/unit of fixed costs and $5/unit of variable costs. An outside supplier has offered to manufacture product Y for you at a wholesale price of $2 per unit. If you outsource the production of Y to the outside supplier in the short term, your profit will: increase by $3,000 decrease by $2,000 remain the same decrease by $3,000 increase by $2,000