Econ Company produces widgets. Each widget sells for $120, and the company sells approximately 50,000 widgets each year. Unit cost data for the year follows: Direct Material, $38 Direct Labor, $20 Other Cost: Variable Fixed Manufacturing $12 $8 Distribution 8 6 a. $70 b. $45 c. $75 d. $89
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Econ Company produces widgets. Each widget sells for $120, and the company sells approximately 50,000 widgets each year. Unit cost data for the year follows:
Direct Material, $38
Direct Labor, $20
Other Cost: Variable Fixed
Manufacturing $12 $8
Distribution 8 6
a. $70b. $45c. $75d. $89
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- Andretti Company has a single product called a Dak. The company normally produces and sells 86,000 Daks each year at a selling price of $62 per unit. The company’s unit costs at this level of activity are given below: Direct materials $ 9.50 Direct labor 9.00 Variable manufacturing overhead 3.20 Fixed manufacturing overhead 5.00 ($430,000 total) Variable selling expenses 4.70 Fixed selling expenses 4.00 ($344,000 total) Total cost per unit $ 35.40 A number of questions relating to the production and sale of Daks follow. Each question is independent. Required: 1-a. Assume Andretti Company has sufficient capacity to produce 111,800 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 30% above the present 86,000 units each year if it increased fixed selling expenses by $130,000. What is the financial advantage (disadvantage) of investing an additional $130,000 in fixed selling expenses? 1-b.…Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 34,000 Rets per year. Costs associated with this level of production and sales are given below: Unit Total Direct materials $ 15 510,000 272,000 102,000 170,000 68,000 Direct labor 8 Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense 3 5 2. 6 204,000 Total cost $ 39 $ 1,326,000 The Rets normally sell for $44 each. Fixed manufacturing overhead is $170,000 per year within the range of 28,000 through 34,000 Rets per year. Required: 1. Assume that due to a recession, Polaski Company expects to sell only 28,000 Rets through regular channels next year. A large retail chain has offered to purchase 6,000 Rets if Polaski is willing to accept a 16% discount off the regular price. There would be no sales commissions on this order; thus, variable selling expenses would be slashed by 75%. However, Polaski Company would…Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 36,000 Rets per year. Costs associated with this level of production and sales are given below: Unit Total Direct materials $ 20 $ 720,000 Direct labor 10 360,000 Variable manufacturing overhead 3 108,000 Fixed manufacturing overhead 9 324,000 Variable selling expense 2 72,000 Fixed selling expense 6 216,000 Total cost $ 50 $ 1,800,000 The Rets normally sell for $55 each. Fixed manufacturing overhead is $324,000 per year within the range of 31,000 through 36,000 Rets per year. Required: 1. Assume that due to a recession, Polaski Company expects to sell only 31,000 Rets through regular channels next year. A large retail chain has offered to purchase 5,000 Rets if Polaski is willing to accept a 16% discount off the regular price. There would be no sales commissions on this order; thus, variable selling expenses would be slashed by…
- Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 42,000 Rets per year. Costs associated with this level of production and sales are given below: Unit Total Direct materials $ 20 2$ 840,000 336,000 126,000 294,000 84,000 252,000 Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense 3 7 6. Total cost $ 46 $ 1,932,000 The Rets normally sell for $51 each. Fixed manufacturing overhead is $294,000 per year within the range of 35,000 through 42,000 Rets per year. Required: 1. Assume that due to a rec chain has offered to purchase 7,000 Rets if Polaski is willing to accept a 16% discount off the regular price. There would be no sales commissions on this order; thus, variable selling expenses would be slashed by 75%. However, Polaski Company would have to purchase a special machine to engrave the retail chain's name on the 7,000 units. This machine…Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 50,000 Rets per year. Costs associated with this level of production and sales are given below: Unit Total Direct materials $ 20 $ 1,000,000 Direct labor 6 300,000 Variable manufacturing overhead 3 150,000 Fixed manufacturing overhead 7 350,000 Variable selling expense 2 100,000 Fixed selling expense 6 300,000 Total cost $ 44 $ 2,200,000 The Rets normally sell for $49 each. Fixed manufacturing overhead is $350,000 per year within the range of 44,000 through 50,000 Rets per year. Required: 1. Assume that due to a recession, Polaski Company expects to sell only 44,000 Rets through regular channels next year. A large retail chain has offered to purchase 6,000 Rets if Polaski is willing to accept a 16% discount off the regular price. There would be no sales commissions on this order; thus, variable selling expenses would be slashed by 75%. However, Polaski…Royal Lawncare Company produces and sells two packaged products—Weedban and Greengrow. Revenue and cost information relating to the products follow: Product Weedban Greengrow Selling price per unit $ 12.00 $ 32.00 Variable expenses per unit $ 2.40 $ 12.00 Traceable fixed expenses per year $ 129,000 $ 34,000 Common fixed expenses in the company total $111,000 annually. Last year the company produced and sold 39,500 units of Weedban and 17,000 units of Greengrow. Required: Prepare a contribution format income statement segmented by product lines.
- Red Jeep Manufacturing currently produces 3,000 tires per month. The following total cost data for 3,000 tires applies to sales to regular customers: Direct materials Direct manufacturing labor Variable manufacturing overhead Fixed manufacturing overhead Total $114,000 42,000 57,000 60,000 $273,000 Assume Red Jeep sells everything it produces. The plant is considering expanding production to 4,000 tires. What is the total cost of producing 4,000 tires? O $364,000 $202,000 $273,000 $344,000Andretti Company has a single product called a Dak. The company normally produces and sells 82,000 Daks each year at a selling price of $64 per unit. The company's unit costs at this level of activity are given below: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses Total cost per unit $ 7.50 11.00 2.20 5.00 3.70 3.00 $ 32.40 ($410,000 total) ($246,000 total) A number of questions relating to the production and sale of Daks follow. Each question is independent. Required: 1-a. Assume Andretti Company has sufficient capacity to produce 102,500 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 25% above the present 82,000 units each year if it increased fixed selling expenses by $100,000. What is the financial advantage (disadvantage) of investing an additional $100,000 in fixed selling expenses? 1-b. Would the additional…Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 48,000 Rets per year. Costs associated with this level of production and sales are given below: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense Total cost Unit $ 25 8 3 7 2 6 $ 51 $ 2,448,000 Total $ 1,200,000 384,000 144,000 336,000 96,000 288,000 The Rets normally sell for $56 each. Fixed manufacturing overhead is $336,000 per year within the range of 42,000 through 48,000 Rets per year. Required: 1. Assume that due to a recession, Polaski Company expects to sell only 42,000 Rets through regular channels next year. A large retail chain has offered to purchase 6,000 Rets if Polaski is willing to accept a 16% discount off the regular price. There would be no sales commissions on this order; thus, variable selling expenses would be slashed by 75%. However, Polaski Company…
- Andretti Company has a single product called a Dak. The company normally produces and sells 85,000 Daks each year at a selling price of $60 per unit. The company's unit costs at this level of activity are given below: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses Total cost per unit $ 9.50 11.00 3.70 6.00 ($510,000 total) 4.70 3.50 ($297,500 total) $ 38.40 A number of questions relating to the production and sale of Daks follow. Each question is independent. Required: 1-a. Assume that Andretti Company has sufficient capacity to produce 106,250 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 25% above the present 85,000 units each year if it were willing to increase the fixed selling expenses by $120,000. What is the financial advantage (disadvantage) of investing an additional $120,000 in fixed selling expenses? 1-b. Would…Andretti Company has a single product called a Dak. The company normally produces and sells 88,000 Daks each year at a selling price of $58 per unit. The company’s unit costs at this level of activity are given below: Direct materials $ 9.50 Direct labor 8.00 Variable manufacturing overhead 2.70 Fixed manufacturing overhead 8.00 ($704,000 total) Variable selling expenses 2.70 Fixed selling expenses 3.50 ($308,000 total) Total cost per unit $ 34.40 A number of questions relating to the production and sale of Daks follow. Each question is independent. Required: 1-a. Assume that Andretti Company has sufficient capacity to produce 123,200 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 40% above the present 88,000 units each year if it were willing to increase the fixed selling expenses by $150,000. What is the financial advantage (disadvantage) of investing an additional $150,000 in…Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 50,000 Rets per year. Costs associated with this level of production and sales are given below: Unit Total Direct materials $ 20 $ 1,000,000 Direct labor 8 400,000 Variable manufacturing overhead 3 150,000 Fixed manufacturing overhead 5 250,000 Variable selling expense 2 100,000 Fixed selling expense 6 300,000 Total cost $ 44 $ 2,200,000 The Rets normally sell for $49 each. Fixed manufacturing overhead is $250,000 per year within the range of 41,000 through 50,000 Rets per year. Required: 1. Assume that due to a recession, Polaski Company expects to sell only 41,000 Rets through regular channels next year. A large retail chain has offered to purchase 9,000 Rets if Polaski is willing to accept a 16% discount off the regular price. There would be no sales commissions on…
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