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 160,000units, is as follows:Direct materialsDirect laborOverhead (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 hasthe 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 thedistributor 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 unitprice 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 whichwill 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 unitprice charged to the distributor?Complete this question by entering your answers in the tabs below.Req A1Req A2Reg B1Req B2Prev1 of 4Next >23NOV17味tvl /280649%24 y.ation for the unit price to charge the distributowill 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 theprice charged to the distributor?Complete this question by entering your answers in the tabs below.Req A1Req A2Req B1Req B2Assume that Mazeppa is currently operating at full capacity. Show the calculation for the unit price to charge the distributorwhich will generate an increase in operating income of $60,000 more than it would be without accepting the specialorder? (Do not round intermediate calculations.)Special SaleSelling priceLess: Direct materialsDirect laborVariable overheadAdditional shipping costsContribution margin per unit< Req A2Req B2>23NOV17étv l280

Contribution margin refers to the sum of money called revenue or profit remained after deducting all the expenses such as foxed as well as variable costs of the desired period of time. Note: Attempting the first part of the with all its subparts of the question. kindly submit the question again mentioning which parts needed answers.a-1) Preparing the statement as follows: Particulars $ Special sale ($) Sellin price 22 Less: Direct labor 4 Direct materials 6 Variable overhead $9×2/3) 6 Additional shipping cost 3 18 Contribution margin per unit $4 a-2) As per the given information, At the current operating level of 100,000 units, the company will not have to move away from its regular customers in order to fill out any special orders. If the company wishes to increase its operating income by $2 per unit included in the special order, if only it needs to create a contribution margin of $4. Therefore, the selling price per unit included in the special order is $22.

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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

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

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ISBN:9781259964947

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Chapter1: Financial Statements And Business Decisions

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Division A makes a part with the following characteristics: Production capacity in units Selling price to outside customers Variable cost per unit Total fixed costs $ $ 30,200 units 22 17 $102,900 Division B, another division of the same company, would like to purchase 17,300 units of the part each period from Division A. Division B is now purchasing these parts from an outside supplier at a price of $20 each. Suppose that Division A has ample idle capacity to handle all of Division B's needs without any increase in fixed costs and without cutting into sales to outside customers. If Division A refuses to accept the $20 price internally and Division B continues to buy from the outside supplier, the company as a whole will be:
DIFFERENTIAL ANALYSIS AND DECISION MAKING Heavy Metals produces various electronics items for use in heavy machines. The company usually produces all the necessary parts for its products. However, an outside supplier has recently offered to sell a specialized part – Part H – to the company for $31 per unit. To evaluate this offer, the company has gathered the following information regarding its own cost of producing the Part H internally: Per unit 15,000 units per year Direct materials 12 180,000 Direct Labour 12 180,000 Variable manufacturing overhead 3 45,000 Fixed manufacturing overhead (one-third belongs to supervisory salaries; two-thirds belongs to the depreciation of special equipment) 6 90,000 Required (show your calculation): i) Assuming that the company has no alternative use for the facilities now…
QUESTION 4: DIFFERENTIAL ANALYSIS AND DECISION MAKING Heavy Metals produces various electronics items for use in heavy machines. The company usually produces all the necessary parts for its products. However, an outside supplier has recently offered to sell a specialized part – Part H – to the company for $31 per unit. To evaluate this offer, the company has gathered the following information regarding its own cost of producing the Part H internally: Per unit 15,000 units per year Direct materials 12 180,000 Direct Labour 12 180,000 Variable manufacturing overhead 3 45,000 Fixed manufacturing overhead (one-third belongs to supervisory salaries; two-thirds belongs to the depreciation of special equipment) 6 90,000 Required (show your calculation): i) Assuming that the company has no alternative use for the…
Rossiter Fittings produces two models of pipe fittings for underwater lines. The two models (RF-12 and RF-25) have the following characteristics, as developed by a product cost analyst RF-12 RF-25 $ 527 $367 11,997 $ 387 Selling price per unit Variable cost per unit $ 307 Expected units sold per year 3,483 The total fixed costs per year for the company are $1,118,960. Required: a. What is the anticipated level of profits for the expected sales volumes? b. Assuming that the product mix is the same at the break-even point, compute the break-even point in units. c. The head of marketing agrees with the data provided by the cost analyst but believes that the sales of the RF-12 model will be double in units from what the cost analyst predicts. The head of marketing agrees that the total unit volume is likely to be as predicted by the cost analyst. What would be the break-even point of sales in units using the assumptions of the head of marketing?
Current Attempt in Progress The fastener division of Southern Fasteners manufactures zippers and then sells them to customers for $7.80 per unit. Its variable cost is $2.97 per unit, and its fixed cost per unit is $1.55. Management would like the fastener division to transfer 11,200 of these zippers to another division within the company at a price of $2.97. The fastener division could avoid $0.43 per zipper of variable packaging costs by selling internally. Determine the minimum transfer price. (a) Assuming the fastener division is not operating at full capacity. (Round answer to 2 decimal places, e.g. 10.50.) Minimum transfer price $ (b) Assuming the fastener division is operating at full capacity. (Round answer to 2 decimal places, e.g. 10.50.) Minimum transfer price $
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Compute the net incremental cost