Glade Company produces a single product. The costs of producing and selling a single unit of this product at the company's current activity level of 8,000 units per month are: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $2.50 3.00 0.50 4.25 1.50 2.00 The normal selling price is $15 per unit. The company's capacity is 10,000 units per month. Glade received an order from a potential overseas customer for 2,000 units at a price of $9 per unit. The order would not disrupt sales to Glade's existing customers and would not change existing fixed costs. However, there would be an order-related cost of $5,600 that Glade would incur because the company would have to buy a special stamp to put the customer's name on the 2,000 units in the order. Glade should: O reject the order because the company's income would decrease by $9.500 O reject the order because the company's income would decrease by $15,100 O reject the order because the company's income would decrease by $2,600 O be indifferent to the order because it would not change the company's income accept the order because the company's income would increase by $3.000
Glade Company produces a single product. The costs of producing and selling a single unit of this product at the company's current activity level of 8,000 units per month are: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $2.50 3.00 0.50 4.25 1.50 2.00 The normal selling price is $15 per unit. The company's capacity is 10,000 units per month. Glade received an order from a potential overseas customer for 2,000 units at a price of $9 per unit. The order would not disrupt sales to Glade's existing customers and would not change existing fixed costs. However, there would be an order-related cost of $5,600 that Glade would incur because the company would have to buy a special stamp to put the customer's name on the 2,000 units in the order. Glade should: O reject the order because the company's income would decrease by $9.500 O reject the order because the company's income would decrease by $15,100 O reject the order because the company's income would decrease by $2,600 O be indifferent to the order because it would not change the company's income accept the order because the company's income would increase by $3.000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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karan
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Transcribed Image Text:Glade Company produces a single product. The costs of producing and selling a single unit of this product at the company's current activity level of 8,000 units per
month are:
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Variable selling and administrative expenses
Fixed selling and administrative expenses
$2.50
3.00
0.50
4.25
1.50
2.00
The normal selling price is $15 per unit. The company's capacity is 10,000 units per month. Glade received an order from a potential overseas customer for 2,000
units at a price of $9 per unit. The order would not disrupt sales to Glade's existing customers and would not change existing fixed costs. However, there would be
an order-related cost of $5,600 that Glade would incur because the company would have to buy a special stamp to put the customer's name on the 2.000 units in the
order.
Glade should:
O reject the order because the company's income would decrease by $9.500
O reject the order because the company's income would decrease by $15,100
O reject the order because the company's income would decrease by $2,600
O be indifferent to the order because it would not change the company's income
O accept the order because the company's income would increase by $3.000
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