Falcon Co. produces a single product. Its normal selling price is $25per unit. The variable costs are $18 per unit. Fixed costs are $22,500for a normal production run of 5,000 units per month. Falcon receiveda request for a special order that would not interfere with normalsales. The order was for 1,500 units with a special price of $19 perunit. Falcon has the capacity to handle the special order, and for thisorder, a variable selling cost of $2 per unit would be eliminated. If theorder is accepted, the differential effect on profit would be a(n)a. increase of $4,500b. decrease of $2,700C. increase of $5,850d. increase of $3,600

Incremental analysis: Incremental analysis refers to the analysis of differential revenue that…

Answered: Falcon Co. produces a single product.…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Falcon Co. produces a single product. Its normal selling price is $27 per unit. The variable costs are $17 per unit. Fixed costs are $21,400 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,530 units with a special price of $19 per unit. Falcon has the capacity to handle the special order, and for this order, a variable selling cost of $2 per unit would be eliminated. If the order is accepted, the differential effect on profit would be a(n) O a increase of $4,896 O b. increase of $7,956 Oc. increase of $6,120 O d. decrease of $3.672
Blanchard Company manufactures a single product that sells for $200 per unit and whose total variable costs are $182 per unit. The company's annual fixed costs are $637,000. The sales manager predicts that annual sales of the company's product will soon reach 40,700 units and its price will increase to $207 per unit. According to the production manager, variable costs are expected to increase to $147 per unit but fixed costs will remain at $637,000. The income tax rate is 30%. What amounts of pretax and after-tax income can the company expect to earn from these predicted changes?
XYZ Company produces two models of wood chairs, A and B. The selling price per unit and the variable manufacturing cost per unit for model A are $240 and $140 respectively. The selling price per unit and the variable manufacturing cost per unit for model B are $320 and $152 respectively. The variable selling expense per unit for models A and B are $40 per unit and $48 per unit respectively. Assume that total fixed expenses are $158,400 per month and the expected monthly sales for models A and B are 7,200 units and 1,800 units respectively. If the sales mix and sales units are as expected, the break-even in sales ($) is: (round figures to the nearest number) Select one: а. 389,908 b. None of the given answers с. 262,632 d. 356,958 е. 563,200
Tampico, Inc. sells a single product for $20. Variable costs are $8 per unit and fixed costs total $120,000 at a volume level of 5,000 units. Assuming that fixed costs do not change, Tampico
Sd
- Your answer is partially correct. Sheridan Co. sells product P-14 at a price of $46 a unit. The per-unit cost data are direct materials $15, direct labour $10, and overhead $12 (75% variable). Sheridan Co. has sufficient capacity to accept a special order for 35,000 units, but at a discount of 25% from the regular price. Selling costs associated with this order would be $3 per unit. Determine whether Sheridan Co. should accept the special order. (Enter loss with a negative sign preceding the number, e.g. -15,000 or parenthesis, e.g. (15,000).) Incremental income (loss) $ Sheridan Co. should not accept the special order.
Goshford Company produces a single product and has capacity to produce 190,000 units per month. Costs to produce its current sales of 152,000 units follow. The regular selling price of the product is $136 per unit. Management is approached by a new customer who wants to purchase 38,000 units of the product for $82.80 per unit. If the order is accepted, there will be no additional fixed manufacturing overhead and no additional fixed selling and administrative expenses. The customer is not in the company’s regular selling territory, so there will be a $6.00 per unit shipping expense in addition to the regular variable selling and administrative expenses. Per Unit Costs at 152,000 Units Direct materials $ 12.50 $ 1,900,000 Direct labor 15.00 2,280,000 Variable manufacturing overhead 14.00 2,128,000 Fixed manufacturing overhead 17.50 2,660,000 Variable selling and administrative expenses 18.00 2,736,000 Fixed selling and administrative expenses 15.00 2,280,000 Totals $ 92.00 $ 13,984,000…
Cranberry has received a special order for 170 units of its product at a special price of $2,350. The product normally sells.for $2,850 and has the following manufacturing costs: Per unit Direct materials 770 Direct labor 470 Variable manufacturing overhead 570 Fixed manufacturing overhead 670 51 Unit cost $2,480 Assume that Cranberry has sufficient capacity to fill the order without harming normal production and sales. If Cranberry accepts the order, what effect will the order have on the company's short-term profit?
XYZ Company incurs costs of $ 30 per unit ($18 variable and $12 fixed) to make a product that normally sells for $42. A foreign wholesaler offers to buy 6,000 units at $26 each. The special order results in additional shipping costs of $1 per unit. Calculate the increase or decrease in net income the company realizes by accepting the special order, assuming they have excess operating capacity. Should the Company accept the special order? Select one: a. XYZ should reject the special offer to avoid 42,000 loss. b. XYZ should accept the offer to gain 24,000 net income. c. XYZ should accept the offer to gain 42,000 net income. d. XYZ should reject the special offer to avoid 24,000 loss.
Capitol, Incorporated, has received a special order for 2,080 units of its product at a special price of $158. The product normally sells for $208 and has the following manufacturing costs: Cost per Unit Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total unit cost $ 58 38 28 48 $ 172 Assume that Capitol has sufficient capacity to fill the order without harming normal production and sales. Required: a. If Capitol accepts the order, what effect will the order have on the company's short-term profit? b. What minimum unit price should Capitol charge to achieve a $48,000 incremental profit? c. Now, assume Capitol is currently operating at full capacity and cannot fill the order without harming normal production and sales. If Capitol accepts the order, what effect will the order have on the company's short-term profit? Complete this question by entering your answers in the tabs below. Required A Required B Required C If Capitol accepts the order,…
Bonita Industries produces a product that requires 2.30 pounds of materials per unit. The allowance for waste and spoilage per unit is 0.40 pounds and 0.10 pounds, respectively. The purchase price is $2 per pound, but a 2% discount is usually taken. Freight costs are $0.10 per pound, and receiving and handling costs are $0.07 per pound. The hourly wage rate is $12 per hour, but a raise which will average $0.30 will go into effect soon. Payroll taxes are $1.20 per hour, per hour, and employee benefits average $2.40 per hour. Standard production time is 1 hour per unit, and the allowance for rest periods and setup is 0.20 hours and 0.10 hours, respectively. The standard direct materials quantity per unit is Ⓒ 2.70 pounds. O 2.30 pounds. O 2.40 pounds. O 2.80 pounds.
It costs Ghala Company OMR 13 of variable and OMR 6 of fixed costs to produce one unit which normally sells for OMR 35. Al Hadid Co. offers to purchase 3,000 units at OMR 15 each. Ghala Co. would incur shipping costs of OMR 1 per unit if the order were accepted. Ghala Co. has sufficient unused capacity to produce the 3,000 units. If the special order is accepted, what will be the effect on net income? Select one: a. OMR 6,000 increase O b. OMR 3,000 increase C. OMR 45,000 increase d. None of the answers are correct e. OMR 9,000 decrease

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