Labor Variable overhead Fixed overhead ($7,200 per month, 4,500 tacos per month) Total costs per taco 0.57 0.27 1.60 $ 3.89 One of Parkview's regular customers asked the company to fill a special order of tacos at a selling price of $3.70 each for a youth basketball tournament at the local school. Parkview has capacity to fill it without affecting total fixed costs for the month. Parkview's general manager (and owner and cook) was concerned about selling the tacos below the cost of $3.89 and has asked for your advice. Required: a. Prepare a schedule to show the impact on Parkview's profits of providing 310 tacos in addition to the regular production and sales of 4,500 tacos per month. b. Based solely on the data given, what is the lowest price per taco at which the special order can be filled without reducing Parkview's profits?
Labor Variable overhead Fixed overhead ($7,200 per month, 4,500 tacos per month) Total costs per taco 0.57 0.27 1.60 $ 3.89 One of Parkview's regular customers asked the company to fill a special order of tacos at a selling price of $3.70 each for a youth basketball tournament at the local school. Parkview has capacity to fill it without affecting total fixed costs for the month. Parkview's general manager (and owner and cook) was concerned about selling the tacos below the cost of $3.89 and has asked for your advice. Required: a. Prepare a schedule to show the impact on Parkview's profits of providing 310 tacos in addition to the regular production and sales of 4,500 tacos per month. b. Based solely on the data given, what is the lowest price per taco at which the special order can be filled without reducing Parkview's profits?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:Required A Required B
Prepare a schedule to show the impact on Parkview's profits of providing 310 tacos in addition to the regular
sales of 4,500 tacos per month.
Note: Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.
Sales revenue
Less variable costs:
Materials
Labor
Variable overhead
Total variable cost
Contribution margin
Less: Fixed costs
Operating profit
Status Quo 4500 Alternative 4810
tacos
tacos
Required A
Required B
Difference
Based solely on the data given, what is the
Parkview's profits?
Note: Enter your answer to 2 decimal places
Lowest price
per taco
Transcribed Image Text:Parkview Fish Tacos sells tacos for $4.70 each. The cost of each taco follows:
Materials (food)
Labor
Variable overhead
Fixed overhead ($7,200 per month, 4,500 tacos per month)
Total costs per taco
$ 1.45
0.57
0.27
1.60
$ 3.89
One of Parkview's regular customers asked the company to fill a special order of tacos at a selling price
of $3.70 each for a youth basketball tournament at the local school. Parkview has capacity to fill it
without affecting total fixed costs for the month. Parkview's general manager (and owner and cook) was
concerned about selling the tacos below the cost of $3.89 and has asked for your advice.
Required:
a. Prepare a schedule to show the impact on Parkview's profits of providing 310 tacos in addition to the
regular production and sales of 4,500 tacos per month.
b. Based solely on the data given, what is the lowest price per taco at which the special order can be
filled without reducing Parkview's profits?
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