K Briny Sail Makers manufactures sails for sailboats. The company has the capacity to produce 35,000 sails per year and is currently producing and selling 30,000 sails per year. The following information relates to current production: Sales price per unit Variable costs per unit Manufacturing Selling and administrative Total fixed costs Manufacturing Selling and administrative $185 $62 $22 $700,000 $300,000 The fixed manufacturing costs increase by $102,000 for every 500 units produced beyond the maximum capacity of the plant. If a special pricing order is accepted for 5,500 sails at a sales price of $150 per unit, and if the order requires no variable or fixed selling and administrative costs, what is the effect on operating income? OA. Operating income increases by $382,000. OB. Operating income decreases by $382,000. OC. Operating income increases by $484,000. OD. Operating income decreases by $484,000

K Briny Sail Makers manufactures sails for sailboats. The company has the capacity to produce 35,000 sails per year and is currently producing and selling 30,000 sails per year. The following information relates to current production: Sales price per unit Variable costs per unit Manufacturing Selling and administrative Total fixed costs Manufacturing Selling and administrative $185 $62 $22 $700,000 $300,000 The fixed manufacturing costs increase by $102,000 for every 500 units produced beyond the maximum capacity of the plant. If a special pricing order is accepted for 5,500 sails at a sales price of $150 per unit, and if the order requires no variable or fixed selling and administrative costs, what is the effect on operating income? OA. Operating income increases by $382,000. OB. Operating income decreases by $382,000. OC. Operating income increases by $484,000. OD. Operating income decreases by $484,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Royal Lawncare Company produces and sells two packaged products-Weedban and Greengrow. Revenue and cost information relating to the products follow: Selling price per unit Variable expenses per unit Traceable fixed expenses per year Product Weedban $ 10.00 $ 3.00 $ 133,000 Greengrow $31.00 $11.00 $ 35,000 Last year the company produced and sold 41,500 units of Weedban and 24,500 units of Greengrow. Its annual common fixed expenses are $105,000. Required: Prepare a contribution format income statement segmented by product lines. Total Company Product Line Weedban Greengrow
Marionette Company manufactures dolls that are sold to various distributors. The company produces at full capacity for six months each year to meet peak demand; the manufacturing facility operates at 70% of capacity for the other six months of the year. The company has provided the following data for the year: No. of units produced and sold 600,000 units Sales price $30 per unit Variable manufacturing costs $10 per unit Fixed manufacturing costs $1,000,000 per year Variable selling and administrative costs $3 per unit Fixed selling and administrative costs $500,000 per year Marionette receives an offer to produce 7000 dolls for a special event. This is a one-time opportunity during a period when the company has excess capacity. What is the minimum sales price the company should accept for the order?
Lazer Tag manufactures computer parts within a relevant range of 50,000 to 100,000 units per year. Complete the following manufacturing cost schedule (a through j) for Lazer Tag. Fill in the following chart. Parts Produced 50,000 100,000 TOTAL COSTS: Variable $75,000 ? Fixed 50,000 ? Total ? ? COSTS PER UNIT: Variable ? ? Fixed ? ? Total ? ?
Eaton Manufacturing currently produces 1,000 bicycles per month. The following per unit data apply for sales to regular customers: 8 Direct materials $50 Direct manufacturing labor Variable manufacturing overhead $12 Fixed manufacturing overhead $15 Total manufacturing costs $85 The plant has capacity for 3,000 bicycles and is considering expanding production to 2,000 bicycles. What is the per unit cost of producing 2,000 bicycles?
Royal Lawncare Company produces and sells two packaged products-Weedban and Greengrow. Revenue and cost information relating to the products follow: Selling price per unit Variable expenses per unit Traceable fixed expenses per year Weedban $9.00 $ 3.10 $ 133,000 Product Greengrow $34.00 $12.00 $ 36,000 Last year the company produced and sold 44,000 units of Weedban and 19,000 units of Greengrow. Its annual common fixed expenses are $97,000. Required: Prepare a contribution format income statement segmented by product lines. Total Company Product Line Weedban Greengrow
Please help me
Sell or Process Further Jensen Manufacturing Company makes a partially completed assembly unit that it sells for $36 per unit. Normally, 42,000 units are sold each year. Variable unit cost data on the assembly are as follows: Direct material $10 Direct labor 8 Variable manufacturing overhead 4 The company is now using only 70% of its normal capacity; it could fully use its normal capacity by processing the assembly further and selling it for $41 per unit. If the company does this, material and labor costs will each increase by $2 per unit and variable overhead will go up by $1 per unit. Fixed costs will increase from the current level of $160,000 to $180,000. Prepare an analysis showing whether Jensen should process the assemblies further. Use a negative sign with answer to only indicate a loss from processing assemblies further; otherwise do not use negative signs with your answers. Sell of Process Further Differential Analysis $ Differential revenue Differential costs Direct material…
Flying Cloud Co. has the following operating data for its manufacturing operations: Unit selling price $ 250 Unit variable cost 100 Total fixed costs 840,000 The company has decided to increase the wages of hourly workers which will increase the unit variable cost by 10%. Increases in the salaries of factory supervisors and property taxes for the factory will increase fixed costs by 4%. If sales prices are held constant, the next break-even point for Flying Cloud Co. will be a. increased by 800 units b. increased by 640 units c. decreased by 640 units d. increased by 400 units
Royal Lawncare Company produces and sells two packaged products-Weedban and Greengrow. Revenue and cost information relating to the products follow: Selling price per unit Variable expenses per unit Traceable fixed expenses per year Product Weedban $ 10.00 $2.40 $ 131,000 Greengrow $ 34.00 $14.00 $ 31,000 Last year the company produced and sold 42,000 units of Weedban and 16,500 units of Greengrow. Its annual common fixed expenses are $111,000. Required: Prepare a contribution format income statement segmented by product lines. Total Company Product Line Weedban Greengrow
Red Jeep Manufacturing currently produces 3,000 tires per month. The following total cost data for 3,000 tires applies to sales to regular customers: Direct materials Direct manufacturing labor Variable manufacturing overhead Fixed manufacturing overhead Total $114,000 42,000 57,000 60,000 $273,000 Assume Red Jeep sells everything it produces. The plant is considering expanding production to 4,000 tires. What is the total cost of producing 4,000 tires? O $364,000 $202,000 $273,000 $344,000
Vishnu
Crane Co. estimates that it will incur $805000 of overhead costs each year in its three main departments, machining ($460000), inspections ($230000) and packing ($115000). The machining department works 4000 hours per year, there are 600 inspections per year, and the packing department packs 1000 orders per year. Information about Crane's two products and their estimated use of cost drivers is as follows: Machining hours Inspections Orders packed Direct labor hours Product X 1000 100 350 1700 Product Y 3000 500 650 1800 If traditional costing based on direct labor hours is used, how much overhead will be assigned to Product X?