Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 87,600 units per year is: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $ 2.50 $ 2.00 $ 0.80 $ 5.25 $ 1.40 $ 1.00 The normal selling price is $25.00 per unit. The company's capacity is 122,400 units per year. An order has been received from a mail- order house for 2,900 units at a special price of $22.00 per unit. This order would not affect regular sales or total fixed costs. Required: 1 What is the financial advantage (disadvantage) of accepting the special order? 2. As a separate matter from the special order, assume the company's inventory includes 1,000 units that are inferior quality. The units must be sold through regular channels at a reduced price. The company does not expect the selling of these inferior units to affect regular sales. What unit cost is relevant for establishing a minimum selling price for the inferior units? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the financial advantage (disadvantage) of accepting the special order? Required 2 >

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal
activity level of 87,600 units per year is:
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Variable selling and administrative expenses.
Fixed selling and administrative expenses
$ 2.50
$ 2.00
$ 0.80
$5.25
$ 1.40.
$ 1.00
The normal selling price is $25.00 per unit. The company's capacity is 122,400 units per year. An order has been received from a mail-
order house for 2,900 units at a special price of $22.00 per unit. This order would not affect regular sales or total fixed costs.
Required:
1. What is the financial advantage (disadvantage) of accepting the special order?
2. As a separate matter from the special order, assume the company's inventory includes 1,000 units that are inferior quality. The units
must be sold through regular channels at a reduced price. The company does not expect the selling of these inferior units to affect
regular sales. What unit cost is relevant for establishing a minimum selling price for the inferior units?
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
What is the financial advantage (disadvantage) of accepting the special order?
< Required!
Required 2 >
Transcribed Image Text:Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 87,600 units per year is: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses. Fixed selling and administrative expenses $ 2.50 $ 2.00 $ 0.80 $5.25 $ 1.40. $ 1.00 The normal selling price is $25.00 per unit. The company's capacity is 122,400 units per year. An order has been received from a mail- order house for 2,900 units at a special price of $22.00 per unit. This order would not affect regular sales or total fixed costs. Required: 1. What is the financial advantage (disadvantage) of accepting the special order? 2. As a separate matter from the special order, assume the company's inventory includes 1,000 units that are inferior quality. The units must be sold through regular channels at a reduced price. The company does not expect the selling of these inferior units to affect regular sales. What unit cost is relevant for establishing a minimum selling price for the inferior units? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the financial advantage (disadvantage) of accepting the special order? < Required! Required 2 >
Required 1 Required 2
As a separate matter from the special order, assume the company's Inventory includes 1,000 units that are inferior quality.
The units must be sold through regular channels at a reduced price. The company does not expect the selling of these inferior
units to affect regular sales. What unit cost is relevant for establishing a minimum selling price for the inferior units?
Note: Round your answer to 2 decimal places.
Relevant cost per unit
< Required 1
Required 2 >
Show less A
Transcribed Image Text:Required 1 Required 2 As a separate matter from the special order, assume the company's Inventory includes 1,000 units that are inferior quality. The units must be sold through regular channels at a reduced price. The company does not expect the selling of these inferior units to affect regular sales. What unit cost is relevant for establishing a minimum selling price for the inferior units? Note: Round your answer to 2 decimal places. Relevant cost per unit < Required 1 Required 2 > Show less A
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