31Landor Appliance Corporation makes and sells electric fans. Each fan regularly sells for $42. The following cost data per fan is based on a full capacity of150,000 fans produced each period.Direct materialsDirect laborManufacturing overhead (70% variable and 30% unavoidable fixed)A special order has been received by Landor for a sale of 25,000 fans to an overseas customer. The only selling costs that would be incurred on thisorder would be $4 per fan for shipping. Landor is now selling 120,000 fans through regular channels each period. Assume that direct labor is anavoidable cost in this decision. What should Landor use as a minimum selling price per fan in negotiating a price for this special order?Multiple Choice$211 per fan58$9$ 10$27 per fan 1Multiple Choice-O$28 per fan$27 per fan$31 per fan$24 per fan

Cost volume profit analysis is the technique used by management for decision-making. The methods…

Answered: Landor Appliance Corporation makes and…

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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MAKE OR BUY San Pablo Machine Works had always made its components in-house. However, Silangan Company had recently offered to supply one component - Part No. C-430 -at a price of 550 pesos each. San Pablo Machine Works uses 5,300 units of part C-430 each year. The current cost to produce this component is as follows: Unit Cost Total Cost Direct materials 250 1,325,000 Direct labor 119 630,700 Variable overhead 95 503,500 Fixed overhead 150 795,000 Total 614 3,254,200 a Calculate which alternative is better. |
Oat Treats manufactures various types of cereal bars featuring oats. Simmons Cereal Company has approached Oat Treats with a proposal to sell the company its top selling oat cereal bar at a price of $27,500 for 20,000 bars. The costs shown are associated with production of 20,000 oat bars currently: The manufacturing overhead consists of $3,000 of variable costs with the balance being allocated to fixed costs. PLEASE NOTE: Costs per unit are rounded to two decimal places and shown with "$" and commas as needed (i.e. $1,234.56). All other dollar amounts are rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345). What is Oat Treats' relevant cost? What does Simmons Cereal's offer cost? If Oat Treats accepts the offer, what will the effect on profit be? Incremental dollar amount = _________ Increase or Decrease? . ___________ Please note: Your answer is either "Increase" or "Decrease" - capital first letters and no quotes.
Nore Milling Co. has a plant capacity of 40,000 units per month. Unit cost capacity are: Direct materials Direct labor Variable overhead Fixed overhead Marketing fixed cost Marketing variable cost P100 150 75 75 175 90 Present monthly sales are 39,000 units at P630 each. Josh Corporation contacted Nore about purchasing 1,000 units at P600 each. The present sales would not be affected by the special order. Nore should Accept the special order due to P215,000 incremental income Accept the special order due to P110,000 incremental income Accept the special order due to P185,000 incremental income Accept the special order due to P10,000 incremental income
Reuben's Deli currently makes rolls for deli sandwiches it produces. It uses 33,000 rolls annually in the production of deli sandwiches. The costs to make the rolls are: Materials $0.23 per roll Labor 0.40 per roll Variable overhead 0.15 per roll Fixed overhead 0.20 per roll A potential supplier has offered to sell Reuben the rolls for $0.88 each. If the rolls are purchased, 30% of the fixed overhead could be avoided. If Reuben accepts the offer, what will the effect on profit be? Reuben would see a $ in profit if he buys the rolls.
Cotton Corp. currently makes 12,500 subcomponents a year in one of its factories. The unit costs to produce are: Per unit Direct materials $ 24.00 Direct labor 20.00 Variable manufacturing overhead 19.00 Fixed manufacturing overhead 9.00 Total unit cost $ 72.00 An outside supplier has offered to provide Cotton Corp. with the 12,500 subcomponents at an $76.00 per unit price. Fixed overhead is not avoidable. If Cotton Corp. accepts the outside offer, what will be the effect on short-term profits? Multiple Choice no change $78,750 increase $112,500 increase $162,500 decrease
Reuben's Dell currently makes rolls for dell sandwiches it produces. It uses 33,000 rolls annually in the production of dell sandwiches. The costs to make the rolls are: Materials $0.24 per roll 0.39 per roll 0.16 per roll 0.20 per roll Labor Variable overhead Fixed overhead A potential supplier has offered to sell Reuben the rolls for $0.89 each. If the rolls are purchased, 30% of the fixed overhead could be avoided. If Reuben accepts the offer, what will the effect Reuben would see a s In profit if he buys the rolls. profit be?
Oat Treats manufactures various types of cereal bars featuring oats. Simmons Cereal Company has approached Oat Treats with a proposal to sell the company its top selling oat cereal bar at a price of $27,500 for 20,000 bars. The costs shown are associated with production of 20,000 oat bars currently: Direct material Direct labor Manufacturing overhead Total The manufacturing overhead consists of $3,000 of variable costs with the balance being allocated to fixed costs. PLEASE NOTE: Costs per unit are rounded to two decimal places and shown with "$" and commas as needed (i.e. $1,234.56). All other dollar amounts are rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345). 1. What is Oat Treats' relevant cost? $14,000 6,000 8,000 $28,000 2. What does Simmons Cereal's offer cost? 3. If Oat Treats accepts the offer, what will the effect on profit be? o Incremental dollar amount = o Increase or Decrease? no quotes. Please note: Your answer is either "Increase" or…
Jov Co sells three products: A, B and C. It can either make the products itself or purchase them from a subcontractor. The following information is available: Machine hours to manufacture Product A B C O 0 O 2,500 5 3 2 O 4,500 Variable cost ($) 30 20 15 For the coming period, Jov Co has received orders from its customers for 5,000 units of each product but it only has 20,000 machine hours available. What is the optimum number of units of product B which Jov Co should purchase from the subcontractor? O 5,000 Purchase cost from subcontractor ($) 40 35 20
Reuben's Deli currently makes rolls for deli sandwiches it produces. It uses 30,000 rolls annually in the production of deli sandwiches. The costs to make the rolls are: Costs Reuben's Deli cost data Amounts Materials Labor Variable overhead Fixed overhead Increments $0.24 per roll 0.40 per roll 0.16 per roll 0.20 per roll A potential supplier has offered to sell Reuben the rolls for $0.90 each. If the rolls are purchased, 30% of the fixed overhead could be avoided. If Reuben accepts the offer, what will the effect on profit be?
Phillips HVAC and Plumbing has received a special one-time order for 1,500 faucets (units) at $5 per unit. Phillips currently produces and sells 7,500 units at $6.00 each. This level represents 75% of its capacity. Production costs for these units are $4.50 per unit, which includes $3.00 variable cost and $1.50 fixed cost. To produce the special order, a new machine needs to be purchased at a cost of $1,000 with a zero salvage value. Phillips management expects no other changes in costs as a result of the additional production. Should the Phillips accept the special order? 1)No, because additional production would exceed capacity. 2)Yes, because incremental costs exceed incremental revenues. 3)Yes, because incremental revenue exceeds incremental costs. 4)No, because incremental costs exceed incremental revenue. 5)No, because the incremental revenue is too low.
Brightstone Tire and Rubber Company has capacity to produce 153,000 tires. Brightstone presently produces and sells 117,000 tires for the North American market at a price of $91 per tire. Brightstone is evaluating a special order from a European automobile company, Euro Motors. Euro is offering to buy 18,000 tires for $75.15 per tire. Brightstone's accounting system indicates that the total cost per tire is as follows: Direct materials $35 Direct labor 13 Factory overhead (60% variable) 21 Selling and administrative expenses (40% variable) 18 Total $87 Brightstone pays a selling 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 per tire. In addition, Euro has made the order conditional on receiving European safety…

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