K-Too Everwear Corporation can manufacture mountain climbing shoes for $32.05 per pair in variable raw material costs and $23.00 per pair in variable labor expenses. The shoes sell for $142 per pair. Last year, production was 120,000 pairs. Fixed costs were $1,165,000. a. What were total production costs? b. What is the marginal cost per pair? c. What is the average cost per pair? d. If the company is considering a one-time order for an extra 5,000 pairs, what is the minimum acceptable total revenue from the order?

K-Too Everwear Corporation can manufacture mountain climbing shoes for $32.05 per pair in variable raw material costs and $23.00 per pair in variable labor expenses. The shoes sell for $142 per pair. Last year, production was 120,000 pairs. Fixed costs were $1,165,000. a. What were total production costs? b. What is the marginal cost per pair? c. What is the average cost per pair? d. If the company is considering a one-time order for an extra 5,000 pairs, what is the minimum acceptable total revenue from the order?

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 58P: Polaris Inc. manufactures two types of metal stampings for the automobile industry: door handles and...

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Polaris Inc. manufactures two types of metal stampings for the automobile industry: door handles and trim kits. Fixed cost equals 146,000. Each door handle sells for 12 and has variable cost of 9; each trim kit sells for 8 and has variable cost of 5. Required: 1. What are the contribution margin per unit and the contribution margin ratio for door handles and for trim kits? 2. If Polaris sells 20,000 door handles and 40,000 trim kits, what is the operating income? 3. How many door handles and how many trim kits must be sold for Polaris to break even? 4. CONCEPTUAL CONNECTION Assume that Polaris has the opportunity to rearrange its plant to produce only trim kits. If this is done, fixed costs will decrease by 35,000, and 70,000 trim kits can be produced and sold. Is this a good idea? Explain.
Mountain Goat Inc. produces mountain climbing gear. The company can manufacture mountain climbing shoes for $14.9 per pair in raw material costs and $11.81 per pair in labor expense. The shoes sell for $114 per pair. Last year, production was 160,000 pairs, and the fixed costs of producing the shoes were $770,000. Required: (a)What were total production costs? (Do not round your intermediate calculations.) |(Click to select) (b)What is the marginal cost per pair? (Do not round your intermediate calculations.) |(Click to select) (c)What is the average cost per pair? (Do not round your intermediate calculations.) (Click to select) ♥ (d)The company is considering a one-time order for an extra 14,000 pairs. What is the minimum total revenue the firm should accept for producing these extra shoes? (Do not round your intermediate calculations.) |(Click to select)
Shalom Company manufactures socks that sell for P60 each. For the coming year, the management estimates fixed costs to be P200,000 and variable costs to be P45 per unit. 1 What is Shalom Company's contribution margin ratio? 2 If the actual sales during the period was P750,000, did the company earn profit or incur loss? Use the underlined words in capital letters as your choice. 3 If in the following period, Shalom Company wants to earn profit of P180,000, how many units should Shalom Company sell?
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