Exercise 4-30 (Static) Special Order (LO 4-1, 2) Alpena Corporation manufactures smartphone and tablet cases. The following is the cost of each unit. Materials Labor Variable overhead Fixed overhead ($1,800,000 per year; 150,000 units per year) Total Decatur Devices has approached Alpena with an offer to buy 3,000 cases at a price of $17.50 each for its new specialty tablet designed for health care workers. The regular price of an Alpena case is $25. Alpena has the capacity to produce 180,000 units without increasing its fixed overhead. Decatur Devices requires that each case use its branding, which requires a more expensive embossing step. This will result in an additional $2.70 per case labor cost. The material cost of of the Decatur case will be the same as for the current models. The Decatur order will also require a one-time rental of embossing equipment for $7,200. Required: a. Prepare a schedule to show the impact of filling the Decatur Devices order on Alpena's profits for the year. b. Would you recommend that Alpena accept the order? Complete this question by entering your answers in the tabs below. c. Considering only profit, determine the minimum quantity of cases in the special order that would make it profitable, assuming capacity is available. Sales revenue Less variable costs: Materials Labor Varinhin unshand Required A Required B. Required C Prepare a schedule to show the impact of filling the Decatur Devices order on Alpena's profits for the year. (Enter your answers in thousands rounded to 1 decimal place. (.e., 5,400,400 should be entered as 5,400.4). Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) $ $ 7.20 2.80 Status Quo 150,000 Units 0.80 12.00 $ 22.80 4,500,000.0 $ 153,000 Units (All Costs In Thousands of Dollars) Alternative 4,552,500.0 $ Difference 52,500.0 higher < Prev higher higher Thinhar 1 of 6 Next >
Exercise 4-30 (Static) Special Order (LO 4-1, 2) Alpena Corporation manufactures smartphone and tablet cases. The following is the cost of each unit. Materials Labor Variable overhead Fixed overhead ($1,800,000 per year; 150,000 units per year) Total Decatur Devices has approached Alpena with an offer to buy 3,000 cases at a price of $17.50 each for its new specialty tablet designed for health care workers. The regular price of an Alpena case is $25. Alpena has the capacity to produce 180,000 units without increasing its fixed overhead. Decatur Devices requires that each case use its branding, which requires a more expensive embossing step. This will result in an additional $2.70 per case labor cost. The material cost of of the Decatur case will be the same as for the current models. The Decatur order will also require a one-time rental of embossing equipment for $7,200. Required: a. Prepare a schedule to show the impact of filling the Decatur Devices order on Alpena's profits for the year. b. Would you recommend that Alpena accept the order? Complete this question by entering your answers in the tabs below. c. Considering only profit, determine the minimum quantity of cases in the special order that would make it profitable, assuming capacity is available. Sales revenue Less variable costs: Materials Labor Varinhin unshand Required A Required B. Required C Prepare a schedule to show the impact of filling the Decatur Devices order on Alpena's profits for the year. (Enter your answers in thousands rounded to 1 decimal place. (.e., 5,400,400 should be entered as 5,400.4). Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) $ $ 7.20 2.80 Status Quo 150,000 Units 0.80 12.00 $ 22.80 4,500,000.0 $ 153,000 Units (All Costs In Thousands of Dollars) Alternative 4,552,500.0 $ Difference 52,500.0 higher < Prev higher higher Thinhar 1 of 6 Next >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
2
Transcribed Image Text:Exercise 4-30 (Static) Special Order (LO 4-1, 2)
Alpena Corporation manufactures smartphone and tablet cases. The following is the cost of each unit.
$ 7.20
2.80
0.80
12.00
$ 22.80
Materials
Labor
Variable overhead
Fixed overhead ($1,800,000 per year; 150,000 units per year)
Total
Decatur Devices has approached Alpena with an offer to buy 3,000 cases at a price of $17.50 each for its new specialty tablet
designed for health care workers. The regular price of an Alpena case is $25. Alpena has the capacity to produce 180,000 units
without increasing its fixed overhead. Decatur Devices requires that each case use its branding, which requires a more expensive
embossing step. This will result in an additional $2.70 per case labor cost. The material cost of of the Decatur case will be the same as
for the current models. The Decatur order will also require a one-time rental of embossing equipment for $7,200.
Required:
a. Prepare a schedule to show the impact of filling the Decatur Devices order on Alpena's profits for the year.
b. Would you recommend that Alpena accept the order?
c. Considering only profit, determine the minimum quantity of cases in the special order that would make it profitable, assuming
capacity is available.
Complete this question by entering your answers in the tabs below.
Required A Required B. Required C
Prepare a schedule to show the impact of filling the Decatur Devices order on Alpena's profits for the year. (Enter your answers in
thousands rounded to 1 decimal: (.e., 5,400,400 should be entered as 5,400.4). Select option "higher" or "lower", keeping
Status Quo as the base. Select "none" if there is no effect.)
Sales revenue
Less variable costs:
Materials
Labor
Varishin munchand
$
Status Quo
150,000 Units
4,500,000.0
$
(All Costs In Thousands of Dollars)
Alternative
153,000 Units
4,552,500.0 $
Difference
52,500.0 higher
< Prev
higher
higher
Phinhar
1 of 6
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