1.Jed Corporation manufactures recreational equipment.Frey Corporation has approached Jed with a specialorder for 30,000 soft balls. Instead of being packagedseparately, the balls are to be bulk packed in boxescontaining 500 balls each. Frey is willing to pay $2.45per ball. Jed's Accounting Department knows thatannual expected production is 400,000 balls. It alsoknows that the current year's production is 410,000balls and that the maximum production capacity is450,000 balls. The following additional information isavailable.Standard unit cost data for 400,000 balls:Direct materialsDirect labor$..90.60Manufacturing overheadVariableFixed ($100,000/400,000) .25.50Packaging per unit.30Advertising ($60,000/400,000) .15Other fixed selling and administrativeexpenses ($120,000/400,000) 30Product unit cost$3.00Unit selling price$4.00Total estimated bulk packaging costsfor special order (30,000 balls,500 per box)$2,500a. Determine the incremental (relevant) costs and revenuesof the decision to accept or not accept the specialorder, and create an incremental analysis proving theresult.b. Assuming Jed does accept the order, how much willoperating income increase (decrease)?c. Assuming Jed wants a $3,000 profit, what is theminimum price it should accept for each ball (round tonearest cent)?

A firm may receive a special offer in bulk quantity apart from its normal sales. The special offer…

Jed Corporation manufactures recreational equipment. Frey Corporation has approached Jed with a special order for 30,000 soft balls. Instead of being packaged separately, the balls are to be bulk packed in boxes containing 500 balls each. Frey is willing to pay $2.45 per ball. Jed's Accounting Department knows that annual expected production is 400,000 balls. It also knows that the current year's production is 410,000 balls and that the maximum production capacity is 450,000 balls. The following additional information is available.

Jed Corporation manufactures recreational equipment. Frey Corporation has approached Jed with a special order for 30,000 soft balls. Instead of being packaged separately, the balls are to be bulk packed in boxes containing 500 balls each. Frey is willing to pay $2.45 per ball. Jed's Accounting Department knows that annual expected production is 400,000 balls. It also knows that the current year's production is 410,000 balls and that the maximum production capacity is 450,000 balls. The following additional information is available.

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 13P: Deuce Sporting Goods manufactures a high-end model tennis racket. The company’s forecasted income...

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