ces Baird Corporation makes and sells state-of-the-art electronics products. One of its segments produces The Math Machine, an inexpensive calculator. The company's chief accountant recently prepared the following income statement showing annual revenues and expenses associated with the segment's operating activities. The relevant range for the production and sale of the calculators is between 32,000 and 66,000 units per year. Revenue (48,eee units $11.00) Unit-level variable costs $3.00) Materials cost (40,000 Labor cost (40,000 $2.00) Manufacturing overhead (40,000 × $0.50) Shipping and handling (40,000 $0.32) Sales commissions (40,000 $2.00) X Contribution margin Fixed expenses Advertising costs Salary of production supervisor Allocated companywide facility-level expenses Net loss Complete this question by entering your answers in the tabs below. Required a. A large discount store has approached the owner of Baird about buying 9,000 calculators. It would replace The Math Machine's label with its own logo to avoid affecting Baird's existing customers. Because the offer was made directly to the owner, no sales commissions on the transaction would be involved, but the discount store is willing to pay only $6.20 per calculator. Calculate the. contribution margin from the special order. Based on quantitative factors alone, should Baird accept the special order? b-1. Baird has an opportunity to buy the 40,000 calculators it currently makes from a reliable competing manufacturer for $6.50 each. The product meets Baird's quality standards. Baird could continue to use its own logo, advertising program, and sales force to distribute the products. Calculate the total cost for Baird to make and buy the 40,000 calculators. b-2. Should Baird buy the calculators or continue to make them? b-3. Should Baird buy the calculators or continue to make them, if the volume of sales were increased to 66,000 units? c. Because the calculator division is currently operating at a loss, should it be eliminated from the company's operations? Support your answer with appropriate computations. Specifically, by what amount would the segment's elimination increase or decrease profitability? Req A Req B1 Req B2 Req B3 $ 440,000 (120,000) (88,000) (20,000) (12,800) (80,000) 127,200 Req C pinur sinn (22,000) (62,000) (82,000) $ (38,800) A large discount store has approached the owner of Baird about buying 9,000 calculators. It would replace The Math Machine's label with its own logo to avoid affecting Baird's existing customers. Because the offer was made directly to the owner, no sales commissions on the transaction would be involved, but the discount store is willing to pay only $6.20 per calculator. Calculate the contribution margin from the special order. Based on quantitative factors alone, should Baird accept the special order? Note: Negatiua

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Baird Corporation makes and sells state-of-the-art electronics products. One of its segments produces The Math Machine, an
inexpensive calculator. The company's chief accountant recently prepared the following income statement showing annual revenues
and expenses associated with the segment's operating activities. The relevant range for the production and sale of the calculators is
between 32,000 and 66,000 units per year.
Revenue (40,eee units $11.00)
Unit-level variable costs
Materials cost (40,000 $3.00)
x
Labor cost (40,000 × $2.00)
Manufacturing overhead (40,000 x $0.50)
Shipping and handling (40,000 × $0.32)
Sales commissions (40,000 × $2.00)
Contribution margin
Fixed expenses
Advertising costs
Salary of production supervisor
Allocated companywide facility-level expenses
Net loss
Complete this question by entering your answers in the tabs below.
Req A
Required
a. A large discount store has approached the owner of Baird about buying 9,000 calculators. It would replace The Math Machine's
label with its own logo to avoid affecting Baird's existing customers. Because the offer was made directly to the owner, no sales
commissions on the transaction would be involved, but the discount store is willing to pay only $6.20 per calculator. Calculate the
contribution margin from the special order. Based on quantitative factors alone, should Baird accept the special order?
b-1. Baird has an opportunity to buy the 40,000 calculators it currently makes from a reliable competing manufacturer for $6.50 each.
The product meets Baird's quality standards. Baird could continue to use its own logo, advertising program, and sales force to
distribute the products. Calculate the total cost for Baird to make and buy the 40,000 calculators.
b-2. Should Baird buy the calculators or continue to make them?
b-3. Should Baird buy the calculators or continue to make them, if the volume of sales were increased to 66,000 units?
c. Because the calculator division is currently operating at a loss, should it be eliminated from the company's operations? Support your
answer with appropriate computations. Specifically, by what amount would the segment's elimination increase or decrease
profitability?
Req B1
Req B2
Req B3
Contribution margin (loss)
Should Baird accept the special order?
$ 440,000
(120,000)
(80,000)
(20,000)
(12,800)
Req C
(80,000)
127,200
(22,000)
(62,000)
(82,000)
$ (38,800)
A large discount store has approached the owner of Baird about buying 9,000 calculators. It would replace The Math
Machine's label with its own logo to avoid affecting Baird's existing customers. Because the offer was made directly to the
owner, no sales commissions on the transaction would be involved, but the discount store is willing to pay only $6.20 per
calculator. Calculate the contribution margin from the special order. Based on quantitative factors alone, should Baird accept
the special order?
Note: Negative amount should be indicated by a minus sign.
Show less A
Transcribed Image Text:ok " t 0 inces Baird Corporation makes and sells state-of-the-art electronics products. One of its segments produces The Math Machine, an inexpensive calculator. The company's chief accountant recently prepared the following income statement showing annual revenues and expenses associated with the segment's operating activities. The relevant range for the production and sale of the calculators is between 32,000 and 66,000 units per year. Revenue (40,eee units $11.00) Unit-level variable costs Materials cost (40,000 $3.00) x Labor cost (40,000 × $2.00) Manufacturing overhead (40,000 x $0.50) Shipping and handling (40,000 × $0.32) Sales commissions (40,000 × $2.00) Contribution margin Fixed expenses Advertising costs Salary of production supervisor Allocated companywide facility-level expenses Net loss Complete this question by entering your answers in the tabs below. Req A Required a. A large discount store has approached the owner of Baird about buying 9,000 calculators. It would replace The Math Machine's label with its own logo to avoid affecting Baird's existing customers. Because the offer was made directly to the owner, no sales commissions on the transaction would be involved, but the discount store is willing to pay only $6.20 per calculator. Calculate the contribution margin from the special order. Based on quantitative factors alone, should Baird accept the special order? b-1. Baird has an opportunity to buy the 40,000 calculators it currently makes from a reliable competing manufacturer for $6.50 each. The product meets Baird's quality standards. Baird could continue to use its own logo, advertising program, and sales force to distribute the products. Calculate the total cost for Baird to make and buy the 40,000 calculators. b-2. Should Baird buy the calculators or continue to make them? b-3. Should Baird buy the calculators or continue to make them, if the volume of sales were increased to 66,000 units? c. Because the calculator division is currently operating at a loss, should it be eliminated from the company's operations? Support your answer with appropriate computations. Specifically, by what amount would the segment's elimination increase or decrease profitability? Req B1 Req B2 Req B3 Contribution margin (loss) Should Baird accept the special order? $ 440,000 (120,000) (80,000) (20,000) (12,800) Req C (80,000) 127,200 (22,000) (62,000) (82,000) $ (38,800) A large discount store has approached the owner of Baird about buying 9,000 calculators. It would replace The Math Machine's label with its own logo to avoid affecting Baird's existing customers. Because the offer was made directly to the owner, no sales commissions on the transaction would be involved, but the discount store is willing to pay only $6.20 per calculator. Calculate the contribution margin from the special order. Based on quantitative factors alone, should Baird accept the special order? Note: Negative amount should be indicated by a minus sign. Show less A
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