Ashvin Required InformationEX 14-37 (Algo) Special Order (LO 14-4, 14-5)[The following information applies to the questions displayed below.]Intercontinental's special order requires 1,700 kilograms of genatope, a solidchemical regularly used in the company's products. The current stock ofgenatope is 9,200 kilograms at a book value of 8.70 p per kilogram. If thespecial order is accepted, the firm will be forced to restock genatope earlierthan expected, at a predicted cost of 9.30 p per kilogram. Without the specialorder, the purchasing manager predicts that the price will be 8.90 p whennormal restocking takes place. Any order of genatope must be in the amountof 6,900 kilograms.EX 14-37 (Algo) Part 2: Identify the relevance of each of the figures given.2. Identify the relevance of each of the figures given in the exercise in terms of making thespecial-order decision.(a) Book value of inventory(b) Quantity to be used in the special order(c) Predicted cost if next order is placed early(d) Predicted cost if next order is placed on time

Irrelevant costs are historical and have little bearing on the decision-making process, whereas…

Answered: Intercontinental's special order…

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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Che Required information [The following information applies to the questions displayed below.] Intercontinental's special order requires 1,400 kilograms of genatope, a solid chemical regularly used in the company's products. The current stock of genatope is 9,600 kilograms at a book value of 8.40 p per kilogram. If the special order is accepted, the firm will be forced to restock genatope earlier than expected, at a predicted cost of 9.00 p per kilogram. Without the special order, the purchasing manager predicts that the price will be 8.60 p when normal restocking takes place. Any order of genatope must be in the amount of 5,000 kilograms. 2. Identify the relevance of each of the figures given in the exercise in terms of making the special-order decision. (a) Book value of inventory (b) Quantity to be used in the special order (c) Predicted cost if next order is placed early (d) Predicted cost if next order is placed on time 4 of 6
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One of your Taiwanese suppliers has bid on a new line of molded plastic parts that is currently being assembled at your plant. The supplier has bid s0.10 per part, given a forecast you provided of 100,000 parts in year 1, 300.000 in year 2; and 500.000 in year 3. Shipping and handiling of parts from the supplier's factory is estimated at $0.02 per unit. Additional inventory handling charges should amount to $0.004 per unit. Finally, administrative costs are estimated at $10 per month. Although your plant is able to continue producing the part, the plant would need to invest in another molding machine, which would cost $10,000. Direct materials can be purchased for $0.05 per unit. Direct labor is estimated at $0.03 per unit plus a 50 percent surcharge for benefits; indirect labor is estimated at $0.013 per unit plus 50 percent benefits. Up-front engineering and design costs will amount to $40,000. Finally, management has insisted that overhead be allocated if the parts are made in-house…
6. Problem 16-11 (Algo) One of your Taiwanese suppliers has bid on a new line of molded plastic parts that is currently being assembled at your plant. The supplier has bid $0.10 per part, given a forecast you provided of 100,000 parts in year 1; 200,000 in year 2; and 300,000 in year 3. Shipping and handling of parts from the supplier’s factory is estimated at $0.01 per unit. Additional inventory handling charges should amount to $0.005 per unit. Finally, administrative costs are estimated at $20 per month. Although your plant is able to continue producing the part, the plant would need to invest in another molding machine, which would cost $10,000. Direct materials can be purchased for $0.04 per unit. Direct labor is estimated at $0.02 per unit for wages plus a 50 percent surcharge for benefits and, indirect labor is estimated at $0.010 per unit plus 50 percent benefits. Up-front engineering and design costs will amount to $30,000. Finally, management has insisted that…
Question: A foreign supplier could furnish Barlow with additonal stocks of the raw material at a substancial premiun over the usual price. Assuming Barlow's estimated customer demand is 500 units per product line and that the company has used its 6,000 pounds of raw material in an optimal fashion. What is the highest price Barlow Company should be willing to pay for an additional pound of materials? Explain. *please help me with the explanation also, thank you
Intercontinental’s special order also requires 1,000 kilograms of genatope, a solid chemical regularly used in the company’s products. The current stock of genatope is 8,000 kilograms at a book value of 8.10 p per kilogram. If the special order is accepted, the firm will be forced to restock genatope earlier than expected, at a predicted cost of 8.70 p per kilogram. Without the special order, the purchasing manager predicts that the price will be 8.30 p when normal restocking takes place. Any order of genatope must be in the amount of 5,000 kilograms. Required:1. What is the relevant cost of genatope?2. Discuss each of the figures in the exercise in terms of its relevance to the decision.
Marula Breweries of Limpopo, South Africa, has received an order for 10 000cartons of beer from Alicante Importers of Alicante, Spain. The beer will be exportedto Spain under the terms of a letter of credit issued by a Madrid bank on behalf ofAlicante Importers. The letter of credit specifies that the face value of the shipment,US$720 000, will be paid 90 days later, after the Madrid bank accepts a draft drawnby Marula Breweries in accordance with the terms of the letter of credit.The current discount rate on a three-month banker’s acceptance is 8% per annum,and Marula Breweries estimates its weighted average cost of capital to be 20% perannum. The commission for selling a banker’s acceptance in the discount market is1.2% of the face amount.How much cash will Marula Breweries receive from the sale if it holds theacceptance until maturity? Do you recommend that Marula Breweries hold theacceptance until maturity, or discount it at once in the U.S. banker’s acceptancemarket?
Hopner Products enters into a contract with Tulles to sell three different products. The total transaction price is $400,000. Each of the products is a separate performance obligation. Based on the information presented in the table, what is the allocated transaction price of product Z using the adjusted market assessment approach? (Round intermediary percentages to the nearest hundredth percent, and round your final answer to the nearest whole number. Product Standalone Price Market Price X ) $140,000 $120, 000 Y $ 100,000 $210, 000 Z Not Available $90,000
Product A is normally sold for $40 per unit. A special price of $34 is offered for the export market. The variable production cost is $26 per unit. An additional export tariff of 14% of revenue must be paid for all export products. Assume there is sufficient capacity for the special order. a. Prepare a differential analysis dated March 16 on whether to reject (Alternative 1) or accept (Alternative 2) the special order. If required, round your answers to two decimal places. If an amount is zero, enter "0". Differential AnalysisReject Order (Alt. 1) or Accept Order (Alt. 2)March 16 RejectOrder(Alternative 1) AcceptOrder(Alternative 2) DifferentialEffects(Alternative 2) Revenues, per unit $fill in the blank 9f235405f072fb5_1 $fill in the blank 9f235405f072fb5_2 $fill in the blank 9f235405f072fb5_3 Costs: Variable manufacturing costs, per unit fill in the blank 9f235405f072fb5_4 fill in the blank 9f235405f072fb5_5 fill in the blank 9f235405f072fb5_6 Export…
One of your Taiwanese suppliers has bid on a new line of molded plastic parts that is currently being assembled at your plant. The supplier has bid $0.10 per part, given a forecast you provided of 200,000 parts in year 1; 300,000 in year 2; and 500,000 in year 3. Shipping and handling of parts from the supplier’s factory is estimated at $0.01 per unit. Additional inventory handling charges should amount to $0.005 per unit. Finally,administrative costs are estimated at $20 per month. Although your plant is able to continue producing the part, the plant would need to invest in another molding machine, which would cost $10,000. Direct materials can be purchased for $0.05 per unit. Direct labor is estimated at $0.03 per unit plus a 50 percent surcharge for benefits; indirect labor is estimated at $0.011 per unit plus 50 percent benefits. Up-front engineering and design costs will amount to $30,000. Finally, management has insisted that overhead be allocated if the parts are made in-house…
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