Deluxia Interiors is approached by Ms. Harper Knox, a new client, for a one-time- only large custom order for a product similar to one sold to regular customers. The following per-unit cost structure applies to regular sales: Cost Item Direct Materials Direct Labor Amount ($) $500 $340 Variable Manufacturing Support $60 Fixed Manufacturing Support Total Manufacturing Cost Markup (65%) Targeted Selling Price $100 $1,000 $650 $1,650 Deluxia Interiors has excess capacity. Ms. Knox wants the product in walnut instead of regular pine, increasing the direct materials cost by $50. The average marketing cost per special order is $160. Question: What is the full cost of the one-time-only special order? Options: A) $1,000 B) $1,210 C) $1,110 D] $1,160

Deluxia Interiors is approached by Ms. Harper Knox, a new client, for a one-time- only large custom order for a product similar to one sold to regular customers. The following per-unit cost structure applies to regular sales: Cost Item Direct Materials Direct Labor Amount ($) $500 $340 Variable Manufacturing Support $60 Fixed Manufacturing Support Total Manufacturing Cost Markup (65%) Targeted Selling Price $100 $1,000 $650 $1,650 Deluxia Interiors has excess capacity. Ms. Knox wants the product in walnut instead of regular pine, increasing the direct materials cost by $50. The average marketing cost per special order is $160. Question: What is the full cost of the one-time-only special order? Options: A) $1,000 B) $1,210 C) $1,110 D] $1,160

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 3CE: Patz Company produces two types of machine parts: Part A and Part B, with unit contribution margins...

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Healthfirst (HF) Ltd has recently started to produce a face shield and product's standard cost data are as follows: Cost per unit Direct materials Perspex (0.5 meters @ $15 per meter) $ 7.50 Direct materials Hardened Plastic (0.25 meters at $20.00 per meter) 5.00 Direct manufacturing labour (0.5 hr @ $30.00 per hr) Manufacturing overhead Total Cost 15.00 Required Should HF accept the offer. Show all computations. 30.00 $57.50 Additional information 45% of the Manufacturing overhead changes with the number of units produced. Additionally, if production of face shields is discontinued, 20% of the remaining fixed cost will be avoided. The budgeted production used to compute overheads is 10,000 units per quarter. HF has been approached by another company who is willing to supply the face shields at $50. Per unit. The space used to manufacture face shields can be used to Generate $ 120,000 in contribution margin per quarter.
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Jackson has received a request for a special order of 9,000 units of product "Michael" for $46.35 each. The normal selling price of this product is $51.26 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product "Michael" is computed as follows: Direct materials $17.24 Dirct labor $6.29 Variable manufacturing overhead $3.78 Fixed manufacturing overhead $6.95 Direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like some modifications made to product "Michael"that would increase the variable costs by $6.32 per unit and that would require a one-time investment of $46288 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order.Determine the effect on total net operating income of accepting the special order.…
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Activity-Based Customer Costing Deeds Company sells custom-made machine parts to industrial equipment manufacturers by bidding cost plus 40 percent, where cost is defined as manufacturing cost plus order processing cost. There are two types of customers: those who place small, frequent orders and those who place larger, less frequent orders. Cost and sales information by customer category is provided below. Frequently OrderingCustomers Less FrequentlyOrdering Customers Sales orders 41,000 4,100 Order size 15 150 Average unit manufacturing cost $40 $40 Order-processing activity costs: Processing sales orders $2,878,500 Order-filling capacity is purchased in steps (order-processing clerks) of 1,000, each step costing $43,000; variable order-filling activity costs are $35 per order. The activity capacity is 55,000 orders; thus, the total order-filling cost is $3,943,500 [(55 steps × $43,000) + ($35…
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Activity-Based Customer Costing Deeds Company sells custom-made machine parts to industrial equipment manufacturers by bidding cost plus 40 percent, where cost is defined as manufacturing cost plus order processing cost. There are two types of customers: those who place small, frequent orders and those who place larger, less frequent orders. Cost and sales information by customer category is provided below. Frequently OrderingCustomers Less FrequentlyOrdering Customers Sales orders 37,000 3,700 Order size 15 150 Average unit manufacturing cost $45 $45 Order-processing activity costs: Processing sales orders $2,878,500 Order-filling capacity is purchased in steps (order-processing clerks) of 1,000, each step costing $45,000; variable order-filling activity costs are $35 per order. The activity capacity is 45,000 orders; thus, the total order-filling cost is $3,449,500 [(45 steps × $45,000) + ($35…
Activity-Based Customer Costing Deeds Company sells custom-made machine parts to industrial equipment manufacturers by bidding cost plus 40 percent, where cost is defined as manufacturing cost plus order processing cost. There are two types of customers: those who place small, frequent orders and those who place larger, less frequent orders. Cost and sales information by customer category is provided below. Frequently OrderingCustomers Less FrequentlyOrdering Customers Sales orders 37,000 3,700 Order size 15 150 Average unit manufacturing cost $50 $50 Order-processing activity costs: Processing sales orders $2,878,500 Order-filling capacity is purchased in steps (order-processing clerks) of 1,000, each step costing $49,000; variable order-filling activity costs are $35 per order. The activity capacity is 45,000 orders; thus, the total order-filling cost is $3,629,500 [(45 steps × $49,000) + ($35…