Juett Company produces a single product. The cost of producing and selling a single unit of thisproduct at the company's normal activity level of 70,000 units per month is as follows:Direct materialsDirect labourVariable manufacturing overheadFixed manufacturing overheadVariable selling & administrativeexpenseFixed selling & administrativeexpense$29.605.802.5017.201.806.70The normal selling price of the product is $72.90 per unit.An order has been received from an overseas customer for 2,000 units to be delivered this monthat a special discounted price. This order would have no effect on the company's normal sales andwould not change the total amount of the company's fixed costs. The variable selling andadministrative expense would be $1.10 less per unit on this order than on normal sales.Direct labour is a variable cost in this company.Required: Suppose there is ample idle capacity to produce the units required by the overseascustomer and the special discounted price on the special order is $66.10 per unit. By how muchwould this special-order increase (decrease) the company's net operating income for the month?Show your working below

Variable cost means the cost which vary with the level of output where as fixed cost remain fixed…

Answered: Juett Company produces a single…

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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Your Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 40,000 units per month is as follows: $18.00 $6.80 $2.40 $11.60 $1.90 $5.10 Direct materials. Direct labor. Variable manufacturing overhead.. Fixed manufacturing overhead. Variable selling & administrative expense. Fixed selling & administrative expense . The normal selling price of the product is $51.10 per unit. An order has beleh received from an overseas customer for 2,000 units to be delivered this month at a special discounted price of $41.60 per unit. This order would have no effect on the company's normal sales and would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $0.50 less per unit on this order than on normal sales. There is ample idle (excess) capacity to produce the units required by the overseas customer. By how much would this special order increase…
Elfalan Corporation produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 51,000 units per month is as follows: Per Unit Direct materials $ 48.10 Direct labor $ 9.20 Variable manufacturing overhead $ 2.20 Fixed manufacturing overhead $ 19.50 Variable selling & administrative expense $ 4.00 Fixed selling & administrative expense $ 19.00 The normal selling price of the product is $108.10 per unit. An order has been received from an overseas customer for 3,100 units to be delivered this month at a special discounted price. This order would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $2.30 less per unit on this order than on normal sales. Direct labor is a variable cost in this company. Suppose there is ample idle capacity to produce the units required by the overseas customer and the special discounted price on…
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Cane Company manufactures two products called Alpha and Beta that sell for $155 and $115, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 110,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 24 $ 12 Direct labor 23 26 Variable manufacturing overhead 22 12 Traceable fixed manufacturing overhead 23 25 Variable selling expenses 19 15 Common fixed expenses 22 17 Total cost per unit $ 133 $ 107 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 2. What is the company’s total amount of common fixed expenses? 3. Assume that Cane expects to produce and sell 87,000 Alphas during the current year. One of Cane's sales representatives has found a…
GEM Limited has a single product Flicks. The company normally produces and sells 80,000units of Flicks each year at a price of $240 per unit. The company’s unit costs at this level ofactivity are as follow:Direct material $57.00Direct labor 60.00Variable manufacturing overhead 16.80Fixed manufacturing overhead 30.00Variable selling and administrative costs 10.20Fixed selling and administrative costs 27.00 Total unit cost $201.00GEM has sufficient capacity to produce 100 000 units of Flicks a year without any increase infixed manufacturing overhead.Required:(a) GEM has an opportunity to sell 10 000 units to an overseas customer. Import duties andother special costs associated with this order would total $42 000. The only selling coststhat would be associated with the order would be a shipping cost of $9.00 per unit.What would be the minimum acceptable unit price for GEM to consider this order?(hint: GEM would not accept the order if it would reduce the…
Han Products manufactures 28,000 units of part 5-6 each year for use on its production line. At this level of activity, the cost per unit for part S-6 Is: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total cost per part $ 3.60 11.00 2.40 6.00 $23.00 An outside supplier has offered to sell 28,000 units of part S-6 each year to Han Products for $21 per part. If Han Products accepts this offer, the facilities now being used to manufacture part S-6 could be rented to another company at an annual rental of $78,000. However, Han Products has determined that two-thirds of the fixed manufacturing overhead being applied to part S-6 would continue even if part S-6 were purchased from the outside supplier. Required: What is the financial advantage (disadvantage) of accepting the outside supplier's offer?

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