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ing costs costs d administrative costs dministrative costs $ 480 110 100 70 $ 760 ceived a special order for 900 tents at a price of $640 per tent from rin ocial order no varial blo colling and minictr

ing costs costs d administrative costs dministrative costs $ 480 110 100 70 $ 760 ceived a special order for 900 tents at a price of $640 per tent from rin ocial order no varial blo colling and minictr

FINANCIAL ACCOUNTING
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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Nardin Outfitters has a capacity to produce 14,000 of their special arctic tents per year. The company is currently producing and selling 5,000 tents per year at a selling price of $1,100 per tent. The cost of producing and selling one tent follows: Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs Total costs The company has received a special order for 900 tents at a price of $640 per tent from Chipman Outdoor Center. It will not have to pay any sales commission on the special order, so the variable selling and administrative costs would be only $49 per tent. The special order would have no effect on total fixed costs. The company has rejected the offer based on the following computations: Selling price per case Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs Net profit (loss) per case Required: a. What is the impact on profit for the year if Nardin Outfitters accepts the special order? b. Do you agree with the decision to reject the special order? Required A Complete this question by entering your answers in the tabs below. $ 480 110 100 70 760 Required B Sales revenue Variable costs: $ 640 480 110 49 70 $ (69) What is the impact on profit for the year if Nardin Outfitters accepts the special order? (Enter your answers in thousands rounded to 1 decimal place. (i.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.) Manufacturing Selling and administrative Contribution margin Fixed costs Operating profit (All revenues and costs in $000) Status Quo Alternative 5000 Units 5900 Units Difference
Transcribed Image Text:Nardin Outfitters has a capacity to produce 14,000 of their special arctic tents per year. The company is currently producing and selling 5,000 tents per year at a selling price of $1,100 per tent. The cost of producing and selling one tent follows: Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs Total costs The company has received a special order for 900 tents at a price of $640 per tent from Chipman Outdoor Center. It will not have to pay any sales commission on the special order, so the variable selling and administrative costs would be only $49 per tent. The special order would have no effect on total fixed costs. The company has rejected the offer based on the following computations: Selling price per case Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs Net profit (loss) per case Required: a. What is the impact on profit for the year if Nardin Outfitters accepts the special order? b. Do you agree with the decision to reject the special order? Required A Complete this question by entering your answers in the tabs below. $ 480 110 100 70 760 Required B Sales revenue Variable costs: $ 640 480 110 49 70 $ (69) What is the impact on profit for the year if Nardin Outfitters accepts the special order? (Enter your answers in thousands rounded to 1 decimal place. (i.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.) Manufacturing Selling and administrative Contribution margin Fixed costs Operating profit (All revenues and costs in $000) Status Quo Alternative 5000 Units 5900 Units Difference
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