Homework Help is Here – Start Your Trial Now!
Business
Accounting
Current Designs faces a number of important decisions that require incremental analysis. Recently, James Smith, owner and CEO of Current Designs, received a phone call from the president of a brewing company. He was calling to inquire about the possibility of Current Designs producing "floating coolers" for a promotion his company was planning. These coolers resemble a kayak but are about one-third the size. They are used to float food and beverages while paddling down the river on a weekend leisure trip. The company would be interested in purchasing 70 coolers for the upcoming summer. It is willing to pay $245 per cooler. The brewing company would pick up the coolers upon completion of the order. James met with Mary Johnson, controller, to identify how much it would cost Current Designs to produce the coolers. After careful analysis, the following costs were identified.

Current Designs faces a number of important decisions that require incremental analysis. Recently, James Smith, owner and CEO of Current Designs, received a phone call from the president of a brewing company. He was calling to inquire about the possibility of Current Designs producing "floating coolers" for a promotion his company was planning. These coolers resemble a kayak but are about one-third the size. They are used to float food and beverages while paddling down the river on a weekend leisure trip. The company would be interested in purchasing 70 coolers for the upcoming summer. It is willing to pay $245 per cooler. The brewing company would pick up the coolers upon completion of the order. James met with Mary Johnson, controller, to identify how much it would cost Current Designs to produce the coolers. After careful analysis, the following costs were identified.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
i need the answer quickly
Current Designs faces a number of important decisions that require incremental analysis. Recently, James Smith, owner and CEO of Current Designs, received a phone call from the president of a brewing company. He was calling to inquire about the possibility of Current Designs producing "floating coolers" for a promotion his company was planning. These coolers resemble a kayak but are about one-third the size. They are used to float food and beverages while paddling down the river on a weekend leisure trip. The company would be interested in purchasing 70 coolers for the upcoming summer. It is willing to pay $245 per cooler. The brewing company would pick up the coolers upon completion of the order. James met with Mary Johnson, controller, to identify how much it would cost Current Designs to produce the coolers. After careful analysis, the following costs were identified. Direct materials $75 /unit Variable overhead $15 /unit Direct labour 55 /unit Current Designs would be able to modify an existing mould to produce the coolers. The cost of these modifications would be approximately $2,200. (a) Prepare an incremental analysis to determine whether Current Designs should accept this special order to produce the coolers. (Enter loss with a negative sign preceding the number, e.g. -15,000 or parenthesis, e.g. (15,000).) Incremental Analysis $ $
Transcribed Image Text:Current Designs faces a number of important decisions that require incremental analysis. Recently, James Smith, owner and CEO of Current Designs, received a phone call from the president of a brewing company. He was calling to inquire about the possibility of Current Designs producing "floating coolers" for a promotion his company was planning. These coolers resemble a kayak but are about one-third the size. They are used to float food and beverages while paddling down the river on a weekend leisure trip. The company would be interested in purchasing 70 coolers for the upcoming summer. It is willing to pay $245 per cooler. The brewing company would pick up the coolers upon completion of the order. James met with Mary Johnson, controller, to identify how much it would cost Current Designs to produce the coolers. After careful analysis, the following costs were identified. Direct materials $75 /unit Variable overhead $15 /unit Direct labour 55 /unit Current Designs would be able to modify an existing mould to produce the coolers. The cost of these modifications would be approximately $2,200. (a) Prepare an incremental analysis to determine whether Current Designs should accept this special order to produce the coolers. (Enter loss with a negative sign preceding the number, e.g. -15,000 or parenthesis, e.g. (15,000).) Incremental Analysis $ $
Expert Solution
steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Cost control
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS