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…

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

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Please don't give image format
9
Mercury Bowie Sdn Bhd manufactures two products, the Y and the Z, which have the following standard selling price and standard costs per unit. Y Z RM RM Standard Selling Price 110 118 Direct Materials (RM4 per kg) 32 16 Direct Labour (RM10 per direct labour hour) 60 80 Variables Overhead (RM1 per machine hour) 4 6 During the next accounting period, the availability of resources are expected to be subjects to the following limitations: Direct Materials 3440 kg Direct Labour Hours 2880 hours Machine capacity 2760 hours The marketing department estimated that the maximum sales potential for product Y is limited to 420 units. There is no sales limitation for product Z. You are asked to advise how these limited facilities and resources can best be used so as to gain the optimum benefit from them. Required: 1.Determine by graphical means the optimal mix of Y and Z at Mercury Bowie Bhd Sdn…
Required information [The following information applies to the questions displayed below.] Performance Products Corporation makes two products, titanium Rims and Posts. Data regarding the two products follow: Rims Posts: Direct Labor- Hours per unit 0.40 0.60 Additional information about the company follows: a. Rims require $20 in direct materials per unit, and Posts require $18. b. The direct labor wage rate is $18 per hour. c. Rims are more complex to manufacture than Posts and they require special equipment. d. The ABC system has the following activity cost pools: Activity Cost Pool Machine setups Special processing General factory Annual Production 26,000 units 88,000 units Unit product cost of Rims Unit product cost of Posts Activity Measure Number of setups Machine-hours Direct labor-hours. Estimated Overhead Cost $28,160 $ 164,560 $ 780,000 Estimated Activity Rims 110 2,000 10,400 Posts 90 0 52,800 Total 200 2,000 63,200 2. Determine the unit product cost of each product…
Don't give answer in image format
Gadubhai
Subject: acounting
None
The following information relates to a. The following per-unit cost information relates to Product K of Magna Company, based on the maximum capacity of 40,000 units. Variable Manufacturing $ 30 Variable Selling 4 Fixed Manufacturing 12 Fixed Selling 7 Unit cost $ 53 Magna is expected to sell all of 40,000 units produced to its regular customers for a price of $80 per unit. Sonya has approached Magma to buy 10,000 units of Product K. If Magna sells to Sonya, variable selling costs will not be incurred. To Sonya, Magna has to charge at least per unit? Multiple Choice $80 $76 $26 $53 $30
Segment X sells its product at SP of 300 per unit. Variable Cost to produce per unit is 120 per unit. Fixed cost is 100,000. X operates at full capacity. What is the minimum price that should be charged to another segment for each unit of product to be transferred? • 120 plus allocated cost of FC • 120 plus opportunity cost and other variable cost • 300 • 120
Division A of SLG Company produces a part it sells to other companies. Sales and cost data for the part are as follows: Capacity in units 60,000 units Selling price per unit O $27 per unit O $39 per unit O $36 per unit O $41 per unit Variable cost per unit O None of the above. Fixed cost per unit at capacity Division B, another division of SLG Company, would like to buy this part from Division A. Division B is currently purchasing the part from an outside source at $38 per unit. If Division A sells to Division B, then $1 in Division A's variable costs can be avoided. Assume Division A has enough idle capacity to handle all of Division B's needs without any increase in fixed costs and without interfering with outside sales. According to the transfer pricing guidelines, what is the lowest acceptable transfer price from the perspective of Division A? $40 per unit $28 per unit $9 per unit