Need step by step answer Louise Automotive is currently operating at 80% capacity. The company recentlyreceived an offer from a Japanese truck manufacturer to purchase 35,000 units of apower steering system component for $200 per unit.The Vice President of Sales, John Lee, mentions that there will be an additional $4.00shipping cost for each component but believes that accepting the order will helpexpand into the international market.To determine variable and fixed costs, Louise's accountant used the High-LowMethod with the following production and cost data for the past two years:Production Level Total Cost200,000 units240,000 units$55,000,000$62,000,000Additionally, the VP of Engineering, Sarah Kim, states that the $200 per unit price isbelow the normal $280 selling price and below the unit cost of the component. Shealso notes that additional setup costs of $230,000 and an equipment lease cost of$260,000 will be required.Using the High-Low Method, determine the expected profit or loss on the specialorder (use a negative sign for a loss).

Explanation of High-Low Method:The High-Low Method is a technique used to estimate variable and…

Answered: Louise Automotive is currently…

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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What would be the impact on xyz s net income if they accept this special order?
Parker Pottery produces a line of vases and a line of ceramic figurines. Each line uses the sameequipment and labor; hence, there are no traceable fixed costs. Common fixed cost equals$30,000. Parker’s accountant has begun to assess the profitability of the two lines and has gathered the following data for last year: Required:1. Compute the number of vases and the number of figurines that must be sold for thecompany to break even.2. Parker Pottery is considering upgrading its factory to improve the quality of its products.The upgrade will add $5,260 per year to total fixed cost. If the upgrade is successful, theprojected sales of vases will be 1,500, and figurine sales will increase to 1,000 units. Whatis the new break-even point in units for each of the products?
Vinu Bhai
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what should the unit price be?
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