Kirby company can manufacture a product for $52 per unit ($36 variable and $16 fixed), a foreign wholesale offers topurchase 10,000 units at $42 each although normal selling price is $76 per unit. If the order is accepted Kirby would incurspecial shipping costs of $4 per unit. Kirby has sufficient unused capacity to product the 10,000 units. If the special orderis acdpeee what will be the effect on net income?

Special order decisions are useful form of decisions being taken in business. Under this,…

Answered: Kirby company can manufacture a product…

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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....... Decision on Accepting Additional Business Miramar Tire and Rubber Company has capacity to produce 196,000 tires. Miramar presently produces and sells 150,000 tires for the North American market at a price of $95.00 per tire. Miramar is evaluating a special order from a South American automobile company, Rio Motors. Rio Motors is offering to buy 23,000 tires for $75.75 per tire. Miramar's accounting system indicates that the total cost per tire is as follows: Direct materials Direct labor Factory overhead (60% variable) $36 13 22 Selling and administrative expenses (30% variable) 19 $90 < Total Miramar pays a sales commission equal to 5% of the selling price on North American orders, which is included in the variable portion of the selling and administrative expenses. However, this special order would not have a sales commission. If the order was accepted, the tires would be shipped overseas for an additional shipping cost of $5.00 per tire. In addition, Rio has made the order…
It costs Bonita Industries $11 of variable and $5 of fixed costs to produce one scale which normally sells for $43. A foreign wholesaler offers to purchase 4100 scales at $15 each. Garner would incur special shipping costs of $1 per scale if the order were accepted. Bonita has sufficient unused capacity to produce the 4100 scales. If the special order is accepted, what will be the effect on net income? O $12300 increase $12300 decrease O $49200 decrease $61500 increase
Diversity Ltd. produces and sells a product called Star. The company is currently selling 9,560 units of the product which represent £143,400. Total fixed costs equal £66,920 and total contribution equals £66,920. Required: Considering this information, is Diversity Ltd. selling a profitable amount of its product Star and which would be your advice for the company? Which is the price per unit at which Diversity Ltd. is selling its product? Explain your answer in detail. Consider that, after an increase in the market demand of product Star, Diversity Ltd. sells 25% more units of product Star. In this new situation, is Diversity Ltd. selling a profitable amount of its product Star? Explain your answer in detail. Draw a graph related to your previous answers in a) and b). Consider the information from the graph, which would be the financial situation of Diversity Ltd. if sales decrease in more than 25%?
Use this information for Stryker Industries to answer the question that follow. Stryker Industries received an offer from an exporter for 30,000 units of product at $19 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price $23 Unit manufacturing costs: Variable 10 Fixed 5 What is the amount of income or loss from the acceptance of the offer? Oa. $300,000 loss Ob. $690,000 loss Oc. $570,000 income Od. $270,000 income Previous Next 7:36 PM CP 12/13/2020
At Blossom Electronics, it costs $33 per unit ($15 variable and $18 fixed) to make an MP3 player that normally sells for $54. A foreign wholesaler offers to buy 4,520 units at $26 each. Blossom Electronics will incur special shipping costs of $1 per unit. Assuming that Blossom Electronics has excess operating capacity, indicate the net income (loss) Blossom Electronics would realize by accepting the special order. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses eg. (45).) Revenues Costs-Variable manufacturing Shipping Net income The special order should be Reject Order $ $ Accept Order Net Income Increase (Decrease) $ $ $ $
Bramble Company manufactures a product with a unit variable cost of $41 and a unit sales price of $75. Fixed manufacturing costs were $79800 when 7980 units were produced and sold, equating to $10 per unit. The company has a one-time opportunity to sell an additional 1000 units at $54 each in an international market, which would not affect its present sales. The company has sufficient capacity to produce the additional units. How much is the relevant income effect of accepting the special order? $13000 $41000 $3000 $23940
At Sandhill Electronics, it costs $31 per unit ($20 variable and $11 fixed) to make an MP3 player that normally sells for $49. A foreign wholesaler offers to buy 3,720 units at $28 each. Sandhill Electronics will incur special shipping costs of $3 per unit. Assuming that Sandhill Electronics has excess operating capacity, indicate the net income (loss) Sandhill Electronics would realize by accepting the special order. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Revenues Costs-Variable manufacturing Shipping Net income $ $ The special order should be accepted Reject Order i i $ $ Accept Order 104,160 (74,400) i (3,720) 26,040 $ $ Net Income Increase (Decrease) 104,160 (74,400) (3,720) 26,040

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