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 86,400 units per year is: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expense Fixed selling and administrative expense The normal selling price is $25.00 per unit. The company's capacity is 114,000 units per year. An order has been received from a mail- order house for 2,300 units at a special price of $22.00 per unit. This order would not affect regular sales or the company's total fixed costs. $2.20 $2.00 $ 0.60 $ 4.05 $ 1.40 $1.00 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 of this product that were produced last year and that are inferior to the current model. The units must be sold through regular channels at reduced prices. The company does not expect the selling of these inferior units to have any affect on the sales of its current model. 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 2 Required 1 As a separate matter from the special order, assume the company's inventory includes 1,000 units of this product that were. produced last year and that are inferior to the current model. The units must be sold through regular channels at reduced prices. The company does not expect the selling of these inferior units to have any affect on the sales of its current model. What unit cost is relevant for establishing a minimum selling price for the inferior units? (Round your answer to 2 decimal places.) Relevant cost per unit Show less A
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 86,400 units per year is: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expense Fixed selling and administrative expense The normal selling price is $25.00 per unit. The company's capacity is 114,000 units per year. An order has been received from a mail- order house for 2,300 units at a special price of $22.00 per unit. This order would not affect regular sales or the company's total fixed costs. $2.20 $2.00 $ 0.60 $ 4.05 $ 1.40 $1.00 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 of this product that were produced last year and that are inferior to the current model. The units must be sold through regular channels at reduced prices. The company does not expect the selling of these inferior units to have any affect on the sales of its current model. 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 2 Required 1 As a separate matter from the special order, assume the company's inventory includes 1,000 units of this product that were. produced last year and that are inferior to the current model. The units must be sold through regular channels at reduced prices. The company does not expect the selling of these inferior units to have any affect on the sales of its current model. What unit cost is relevant for establishing a minimum selling price for the inferior units? (Round your answer to 2 decimal places.) Relevant cost per unit Show less A
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 86,400 units per year is:
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Variable selling and administrative expense
Fixed selling and administrative expense
The normal selling price is $25.00 per unit. The company's capacity is 114,000 units per year. An order has been received from a mail-
order house for 2,300 units at a special price of $22.00 per unit. This order would not affect regular sales or the company's total fixed
costs.
$ 2.20
$ 2.00
$ 0.60
$ 4.85
$ 1.40
$1.00
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 of this product that were
produced last year and that are inferior to the current model. The units must be sold through regular channels at reduced prices. The
company does not expect the selling of these inferior units to have any affect on the sales of its current model. 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
As a separate matter from the special order, assume the company's inventory includes 1,000 units of this product that were
produced last year and that are inferior to the current model. The units must be sold through regular channels at reduced
prices. The company does not expect the selling of these inferior units to have any affect on the sales of its current model.
What unit cost is relevant for establishing a minimum selling price for the inferior units? (Round your answer to 2 decimal
places.)
Relevant cost per unit
Show less A
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