cIntosh Enterprises produces giant stuffed bears. Each bear consists of $12 of variable costs, $9 of fixed costs, and sells for $45. A wholesaler offers to buy 8,000 units at $14 each of which McIntosh has the capacity to produce. McIntosh will incur extra shipping costs of $1.25 per bear. Question: Determine the incremental income or loss that McIntosh Enterprises would realize by accepting the special orde

cIntosh Enterprises produces giant stuffed bears. Each bear consists of $12 of variable costs, $9 of fixed costs, and sells for $45. A wholesaler offers to buy 8,000 units at $14 each of which McIntosh has the capacity to produce. McIntosh will incur extra shipping costs of $1.25 per bear. Question: Determine the incremental income or loss that McIntosh Enterprises would realize by accepting the special orde

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 11E

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1. McIntosh Enterprises produces giant stuffed bears. Each bear consists of $12 of variable costs, $9 of fixed costs, and sells for $45. A wholesaler offers to buy 8,000 units at $14 each of which McIntosh has the capacity to produce. McIntosh will incur extra shipping costs of $1.25 per bear. Instructions Determine the incremental income or loss that McIntosh Enterprises would realize by accepting the special order.
Pederson Enterprises produces giant stuffed bears. Each bear consists of $12 of variable costs and $9 of fixed costs and sells for $45. A wholesaler offers to buy 6,000 units at $14 each, of which Pederson has the capacity to produce. Pederson will incur extra shipping costs of $1 per bear. What is the incremental income or loss that Pederson Enterprises would realize by accepting the special order? Should Pederson Enterprises accept the special order? lyi HH 99+
Sunland Enterprises produces giant stuffed bears. Each bear consists of $16 of variable costs and $13 of fixed costs and sells for $49. A wholesaler offers to buy 9,280 units at $18 each, for which Sunland has the capacity to produce. Sunland will incur extra shipping costs of $1 per bear. Determine the incremental income or loss that Sunland Enterprises would realize by accepting the special order. Incremental profit e Textbook and Media Save for Later $ Attempts: 0 of 1 used Submit Answer
Marikina Shoe Manufacturing Company will produce a special-style shoe if the order size is large enough to provide a reasonable profit. For each special -style order, the company incurs a fixed cost of P20,000 for the production set up. The variable cost is P600 per pair, and each pair sells for P800. a. Let x indicate the number of pairs of shoes produced. Develop a mathematical model for total cost of producing x paiars of shoes. b. Let P indicate the total profit. Develop a mathematical model for the total profit realized from an order for x pairs of shoes. c. How large must the order be for Marikina to breakeven?
Winter Sports manufactures snowboards. Its cost of making 1,700 bindings is as follows: (Click the icon to view the costs.) Suppose Livingston will sell bindings to Winter Sports for $14 each. Winter Sports would pay $1 per unit to transport the bindings to its manufacturing plant, where it would add its own logo at a cost of $0.40 per binding. Read the requirements. Requirement 1. Winter Sports' accountants predict that purchasing the bindings from Livingston will enable the company to avoid $2,200 of fixed overhead. Prepare an analysis to show whether Winter Sports should make or buy the bindings. (Only enter the net relevant costs. For the Difference column, use a minus sign or parentheses only when the cost of outsourcing exceeds the cost of making the bindings in-house.) Make Bindings Outsource Bindings Difference (Make-Outsource) - X Binding costs Data table Variable costs: $ 49 Direct materials Direct labor Variable overhead Fixed costs Durahan minn fram manten ? 7 Q A 2 W S 43…
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 $5.50 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: Annual fixed costs Variable cost per switch Machine A $632,400 1.78 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 235,000 switches per year and what is the total cost of that alternative? Required 1 Required 2 Required 3 Complete this question by entering your answers in the tabs below. Machine B $ 860,100 0.80 Minimum number of switches For each machine, what is the minimum number of switches that…
The Lamar Company manufactures wiring tools. The company is currently producing well below its full capacity. The Boston Company has approached Lamar with an offer to buy 15,000 tools at $1.80 each. Lamar sells its tools wholesale for $1.90 each; the average cost per unit is $1.88, of which $0.32 is fixed costs. If Lamar were to accept Boston's offer, what would be the increase in Lamar's operating profits? Multiple Choice O O $1,500. $5,100. $1,200. $3,600.
Muscat Inc. has been manufacturing its own Camera for its Mobile Phone. The company is currently operating at 100% of capacity. Variable manufacturing overhead cost is OMR 3 per unit. The direct materials and direct labor cost per unit to make the camera are OMR 4 and OMR 6, respectively, fixed cost is OMR 50,000. Normal production is 50,000 Mobile Phone per year.
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 $1.45 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 $ 108,900 $ 145,000 Variable cost per switch 0.46 0.20 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 150,000 switches per year and what is the total cost of that alternative?
The Arthur Company manufactures kitchen utensils. The company is currently producing well below its full capacity. The Benton Company has approached Arthur with an offer to buy 17,000 utensils at $0.85 each. Arthur sells its utensils wholesale for $0.96 each; the average cost per unit is $0.91, of which $0.10 is fixed costs. If Arthur were to accept Benton's offer, what would be the increase in Arthur's operating profits? Multiple Choice O O $850. $1,020. $680. $1,870.
A company produces a special new type of TV. The company has fixed costs of $487,000, and it costs $1500 to produce each TV. The company projects that if it charges a price of $2500 for the TV, it will be able to sell 750 TVs. If the company wants to sell 800 TVs, however, it must lower the price to $2200. Assume a linear demand. What are the company's profits if marginal profit is $0?
FRANCORP sells product ABC for $60. The variable production cost is $12, the fixed production cost is $20 per unit, and the variable selling cost is $2. A customer has requested a special order for 12,000 units of product ABC with a unique colour — purple. This special order would not involve any selling costs, but FRANCORP would need to purchase a special colouring machine which costs $75,000. Below what price would FRANCORP actually be losing money on the sale? Note: there is enough capacity to fulfill this order. a. $22.80b. $18.25c. $15.75d. $17.15