Rercise 21.12 (Static) Pricing a Special Order (LO21-1, LO21-2, LO21-3) azeppa Corporation sells relays at a selling price of $28 per unit. The company's cost per unit, based on full capacity of 160,000 nits, is as follows: Direct materials Direct labor Overhead (2/3 of which is variable) $ 6 4 9. azeppa has been approached by a distributor in Montana offering to buy a special order consisting of 30,000 relays. Mazeppa ha e capacity to fill the order. However, it will incur an additional shipping cost of $2 for each relay it sells to the distributor. 1. Assume that Mazeppa is currently operating at a level of 100000 unito

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
Exercise 21.12 (Static) Pricing a Special Order (LO21-1, LO21-2, LO21-3)
Mazeppa Corporation sells relays at a selling price of $28 per unit. The company's cost per unit, based on full capacity of 160,000
units, is as follows:
Direct materials
Direct labor
Overhead (2/3 of which is variable)
Mazeppa has been approached by a distributor in Montana offering to buy a special order consisting of 30,000 relays. Mazeppa has
the capacity to fill the order. However, it will incur an additional shipping cost of $2 for each relay it sells to the distributor.
a-1. Assume that Mazeppa is currently operating at a level of 100,000 units. Show the calculation for the unit price to charge the
distributor which will generate an increase in operating income of $2 per unit?
a-2. What is your interpretation of the changes to the contribution margin per unit and the operating income on account of the unit
price charged to the distributor?
b-1. Assume that Mazeppa is currently operating at full capacity. Show the calculation for the unit price to charge the distributor which
will generate an increase in operating income of $60,000more than it would be without accepting the special order?
b-2. What is your interpretation of the changes to the contribution margin per unit and the operating income on account of the unit
price charged to the distributor?
Complete this question by entering your answers in the tabs below.
Req A1
Req A2
Reg B1
Req B2
Prev
1 of 4
Next >
23
NOV
17
味tvl /
280
649
%24
Transcribed Image Text:Exercise 21.12 (Static) Pricing a Special Order (LO21-1, LO21-2, LO21-3) Mazeppa Corporation sells relays at a selling price of $28 per unit. The company's cost per unit, based on full capacity of 160,000 units, is as follows: Direct materials Direct labor Overhead (2/3 of which is variable) Mazeppa has been approached by a distributor in Montana offering to buy a special order consisting of 30,000 relays. Mazeppa has the capacity to fill the order. However, it will incur an additional shipping cost of $2 for each relay it sells to the distributor. a-1. Assume that Mazeppa is currently operating at a level of 100,000 units. Show the calculation for the unit price to charge the distributor which will generate an increase in operating income of $2 per unit? a-2. What is your interpretation of the changes to the contribution margin per unit and the operating income on account of the unit price charged to the distributor? b-1. Assume that Mazeppa is currently operating at full capacity. Show the calculation for the unit price to charge the distributor which will generate an increase in operating income of $60,000more than it would be without accepting the special order? b-2. What is your interpretation of the changes to the contribution margin per unit and the operating income on account of the unit price charged to the distributor? Complete this question by entering your answers in the tabs below. Req A1 Req A2 Reg B1 Req B2 Prev 1 of 4 Next > 23 NOV 17 味tvl / 280 649 %24
y.
ation for the unit price to charge the distributo
will generate an increase in operating income of $60,000 more than it would be without accepting the special order?
b-2. What is your interpretation of the changes to the contribution margin per unit and the operating income on account of the
price charged to the distributor?
Complete this question by entering your answers in the tabs below.
Req A1
Req A2
Req B1
Req B2
Assume that Mazeppa is currently operating at full capacity. Show the calculation for the unit price to charge the distributor
which will generate an increase in operating income of $60,000 more than it would be without accepting the special
order? (Do not round intermediate calculations.)
Special Sale
Selling price
Less: Direct materials
Direct labor
Variable overhead
Additional shipping costs
Contribution margin per unit
< Req A2
Req B2
>
<Prev
1 of 4
Next >
23
NOV
17
étv l
280
Transcribed Image Text:y. ation for the unit price to charge the distributo will generate an increase in operating income of $60,000 more than it would be without accepting the special order? b-2. What is your interpretation of the changes to the contribution margin per unit and the operating income on account of the price charged to the distributor? Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B1 Req B2 Assume that Mazeppa is currently operating at full capacity. Show the calculation for the unit price to charge the distributor which will generate an increase in operating income of $60,000 more than it would be without accepting the special order? (Do not round intermediate calculations.) Special Sale Selling price Less: Direct materials Direct labor Variable overhead Additional shipping costs Contribution margin per unit < Req A2 Req B2 > <Prev 1 of 4 Next > 23 NOV 17 étv l 280
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Follow-up Questions
Read through expert solutions to related follow-up questions below.
Follow-up Question
Exercise 21.12 (Static) Pricing a Special Order (LO21-1, LO21-2, LO21-3)
Mazeppa Corporation sells relays at a selling price of $28 per unit. The company's cost per unit, based on full capacity of 160,000
units, is as follows:
Direct materials
$ 6
Direct labor
4
Overhead (2/3 of which is variable)
9
Mazeppa has been approached by a distributor in Montana offering to buy a special order consisting of 30,000 relays. Mazeppa has
the capacity to fill the order. However, it will incur an additional shipping cost of $2 for each relay it sells to the distributor.
a-1. Assume that Mazeppa is currently operating at a level of 100,000 units. Show the calculation for the unit price to charge the
distributor which will generate an increase in operating income of $2 per unit?
a-2. What is your interpretation of the changes to the contribution margin per unit and the operating income on account of the unit
price charged to the distributor?
b-1. Assume that Mazeppa is currently operating at full capacity. Show the calculation for the unit price to charge the distributor which
will generate an increase in operating income of $60,000 more than it would be without accepting the special order?
b-2. What is your interpretation of the changes to the contribution margin per unit and the operating income on account of the unit
price charged to the distributor?
Complete this question by entering your answers in the tabs below.
Req A1
Req A2
Reg B1
Reg B2
Assume that Mazeppa is currently operating at a level of 100,000 units. Show the calculation for the unit price to charge the
distributor which will generate an increase in operating income of $2 per unit? (Do not round intermediate calculations.)
Special Sale
Selling price
Less: Direct materials
Direct labor
Variable overhead
Additional shipping costs
Contribution margin per unit
Transcribed Image Text:Exercise 21.12 (Static) Pricing a Special Order (LO21-1, LO21-2, LO21-3) Mazeppa Corporation sells relays at a selling price of $28 per unit. The company's cost per unit, based on full capacity of 160,000 units, is as follows: Direct materials $ 6 Direct labor 4 Overhead (2/3 of which is variable) 9 Mazeppa has been approached by a distributor in Montana offering to buy a special order consisting of 30,000 relays. Mazeppa has the capacity to fill the order. However, it will incur an additional shipping cost of $2 for each relay it sells to the distributor. a-1. Assume that Mazeppa is currently operating at a level of 100,000 units. Show the calculation for the unit price to charge the distributor which will generate an increase in operating income of $2 per unit? a-2. What is your interpretation of the changes to the contribution margin per unit and the operating income on account of the unit price charged to the distributor? b-1. Assume that Mazeppa is currently operating at full capacity. Show the calculation for the unit price to charge the distributor which will generate an increase in operating income of $60,000 more than it would be without accepting the special order? b-2. What is your interpretation of the changes to the contribution margin per unit and the operating income on account of the unit price charged to the distributor? Complete this question by entering your answers in the tabs below. Req A1 Req A2 Reg B1 Reg B2 Assume that Mazeppa is currently operating at a level of 100,000 units. Show the calculation for the unit price to charge the distributor which will generate an increase in operating income of $2 per unit? (Do not round intermediate calculations.) Special Sale Selling price Less: Direct materials Direct labor Variable overhead Additional shipping costs Contribution margin per unit
Solution
Bartleby Expert
SEE SOLUTION
Knowledge Booster
Break-even Analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education