Homework Help is Here – Start Your Trial Now!
Business
Accounting
Grant Industries, a manufacturer of electronic parts, has recently received an invitation to bid on a special order for 25,500 units of one of its most popular products. Grant currently manufactures 51,000 units of this product in its Loveland, Ohio, plant. The plant is operating at 50% capacity. There will be no marketing costs on the special order. The sales manager of Grant wants to set the bid at $11 because she is sure that Grant will get the business at that price. Others on the executive committee of the firm object, saying that Grant would lose money on the special order at that price. Units Manufacturing costs: Direct materials. Direct labor Factory overhead Total manufacturing costs Unit cost 51,000 $ 153,000 204,000 306,000 $ 663,000 $ 13 Required 2 Required 4 Required: 2. What is the relevant cost per unit? What do you think the minimum short-term bid price per unit should be? What would be the impact on short-term operating income if the order is accepted at the price recommended by the sales manager? 4. What would the total opportunity cost be if by accepting the special order the company lost sales of 6,900 units to its regular customers? Assume the preceding facts plus a normal selling price of $24 per unit. 76,500 $ 229,500 306,000 382,500 $ 918,000 $12 Complete this question by entering your answers in the tabs below. What would the total opportunity cost be if by accepting the special order the company lost sales of 6,900 units to its regular customers? Assume the preceding facts plus a normal selling price of $24 per unit. Total opportunity cost < Required 2 Required 4 >

Grant Industries, a manufacturer of electronic parts, has recently received an invitation to bid on a special order for 25,500 units of one of its most popular products. Grant currently manufactures 51,000 units of this product in its Loveland, Ohio, plant. The plant is operating at 50% capacity. There will be no marketing costs on the special order. The sales manager of Grant wants to set the bid at $11 because she is sure that Grant will get the business at that price. Others on the executive committee of the firm object, saying that Grant would lose money on the special order at that price. Units Manufacturing costs: Direct materials. Direct labor Factory overhead Total manufacturing costs Unit cost 51,000 $ 153,000 204,000 306,000 $ 663,000 $ 13 Required 2 Required 4 Required: 2. What is the relevant cost per unit? What do you think the minimum short-term bid price per unit should be? What would be the impact on short-term operating income if the order is accepted at the price recommended by the sales manager? 4. What would the total opportunity cost be if by accepting the special order the company lost sales of 6,900 units to its regular customers? Assume the preceding facts plus a normal selling price of $24 per unit. 76,500 $ 229,500 306,000 382,500 $ 918,000 $12 Complete this question by entering your answers in the tabs below. What would the total opportunity cost be if by accepting the special order the company lost sales of 6,900 units to its regular customers? Assume the preceding facts plus a normal selling price of $24 per unit. Total opportunity cost < Required 2 Required 4 >

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
Grant Industries, a manufacturer of electronic parts, has recently received an invitation to bid on a special order for 25,500 units of one of its most popular products. Grant currently manufactures 51,000 units of this product in its Loveland, Ohio, plant. The plant is operating at 50% capacity. There will be no marketing costs on the special order. The sales manager of Grant wants to set the bid at $11 because she is sure that Grant will get the business at that price. Others on the executive committee of the firm object, saying that Grant would lose money on the special order at that price. Units Manufacturing costs: Direct materials Direct labor Factory overhead Total manufacturing costs Unit cost 51,000 $ 153,000 204,000 306,000 $ 663,000 $ 13 Required 2 Required 4 Required: 2. What is the relevant cost per unit? What do you think the minimum short-term bid price per unit should be? What would be the impact on short-term operating income if the order is accepted at the price recommended by the sales manager? 4. What would the total opportunity cost be if by accepting the special order the company lost sales of 6,900 units to its regular customers? Assume the preceding facts plus a normal selling price of $24 per unit. 76,500 $ 229,500 306,000 382,500 $ 918,000 $ 12 Complete this question by entering your answers in the tabs below. What would the total opportunity cost be if by accepting the special order the company lost sales of 6,900 units to its regular customers? Assume the preceding facts plus a normal selling price of $24 per unit. Total opportunity cost < Required 2 Required 4 >
Transcribed Image Text:Grant Industries, a manufacturer of electronic parts, has recently received an invitation to bid on a special order for 25,500 units of one of its most popular products. Grant currently manufactures 51,000 units of this product in its Loveland, Ohio, plant. The plant is operating at 50% capacity. There will be no marketing costs on the special order. The sales manager of Grant wants to set the bid at $11 because she is sure that Grant will get the business at that price. Others on the executive committee of the firm object, saying that Grant would lose money on the special order at that price. Units Manufacturing costs: Direct materials Direct labor Factory overhead Total manufacturing costs Unit cost 51,000 $ 153,000 204,000 306,000 $ 663,000 $ 13 Required 2 Required 4 Required: 2. What is the relevant cost per unit? What do you think the minimum short-term bid price per unit should be? What would be the impact on short-term operating income if the order is accepted at the price recommended by the sales manager? 4. What would the total opportunity cost be if by accepting the special order the company lost sales of 6,900 units to its regular customers? Assume the preceding facts plus a normal selling price of $24 per unit. 76,500 $ 229,500 306,000 382,500 $ 918,000 $ 12 Complete this question by entering your answers in the tabs below. What would the total opportunity cost be if by accepting the special order the company lost sales of 6,900 units to its regular customers? Assume the preceding facts plus a normal selling price of $24 per unit. Total opportunity cost < Required 2 Required 4 >
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Theory of Constraints (TOC)
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS