Nardin Outfitters has a capacity to produce 18,500 of their special arctic tents per year. The company is currently producing and selling 5,000 tents per year at a selling price of $1,550 per tent. The cost of producing and selling one tent follows: Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs Total costs The company has received a special order for 1,800 tents at a price of $730 per tent from Chipman Outdoor Center. It will not have to pay any sales commission on the special order, so the variable selling and administrative costs would be only $58 per tent. The special order would have no effect on total fixed costs. The company has rejected the offer based on the following computations: Selling price per case Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs Net profit (loss) per case Required A $ 570 155 145 115 $985 Required: a. What is the impact on profit for the year if Nardin Outfitters accepts the special order? b. Do you agree with the decision to reject the special order? Complete this question by entering your answers in the tabs below. Required B Sales revenue Variable costs $ 730 578 155 58 115 $ (168) Manufacturing Selling and administrative Contribution margin Fixed costs Operating profit What is the impact on profit for the year if Nardin Outfitters accepts the special order? (Enter your answers in thousands rounded to 1 decimal place. (1.e., 5,400,400 should be entered as 5,400.4). Select option "higher" or "lower, keeping Stat Quo as the base. Select "none" if there is no effect.) (All revenues and costs in $000) Status Quo Alternative 5000 Units 6800 Units Difference
Nardin Outfitters has a capacity to produce 18,500 of their special arctic tents per year. The company is currently producing and selling 5,000 tents per year at a selling price of $1,550 per tent. The cost of producing and selling one tent follows: Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs Total costs The company has received a special order for 1,800 tents at a price of $730 per tent from Chipman Outdoor Center. It will not have to pay any sales commission on the special order, so the variable selling and administrative costs would be only $58 per tent. The special order would have no effect on total fixed costs. The company has rejected the offer based on the following computations: Selling price per case Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs Net profit (loss) per case Required A $ 570 155 145 115 $985 Required: a. What is the impact on profit for the year if Nardin Outfitters accepts the special order? b. Do you agree with the decision to reject the special order? Complete this question by entering your answers in the tabs below. Required B Sales revenue Variable costs $ 730 578 155 58 115 $ (168) Manufacturing Selling and administrative Contribution margin Fixed costs Operating profit What is the impact on profit for the year if Nardin Outfitters accepts the special order? (Enter your answers in thousands rounded to 1 decimal place. (1.e., 5,400,400 should be entered as 5,400.4). Select option "higher" or "lower, keeping Stat Quo as the base. Select "none" if there is no effect.) (All revenues and costs in $000) Status Quo Alternative 5000 Units 6800 Units Difference
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Nardin Outfitters has a capacity to produce 18,500 of their special arctic tents per year. The company is currently
producing and selling 5,000 tents per year at a selling price of $1,550 per tent. The cost of producing and selling
one tent follows:
Variable manufacturing costs
Fixed manufacturing costs
Variable selling and administrative costs
Fixed selling and administrative costs
Total costs
The company has received a special order for 1,800 tents at a price of $730 per tent from Chipman Outdoor Center.
It will not have to pay any sales commission on the special order, so the variable selling and administrative costs
would be only $58 per tent. The special order would have no effect on total fixed costs. The company has rejected
the offer based on the following computations:
Selling price per case
Variable manufacturing costs
Fixed manufacturing costs
Variable selling and administrative costs
Fixed selling and administrative costs
Net profit (loss) per case
$ 570
155
145
115
$985
Required:
a. What is the impact on profit for the year if Nardin Outfitters accepts the special order?
b. Do you agree with the decision to reject the special order?
Complete this question by entering your answers in the tabs below.
Sales revenue
Variable costs
$.730
578
155
58
115
$ (168)
Required A
What is the impact on profit for the year if Nardin Outfitters accepts the special order? (Enter your answers in thousands
rounded to 1 decimal place. (1.e., 5,400,400 should be entered as 5,400.4). Select option "higher or lower", keeping Stat
Quo as the base. Select "none" if there is no effect.)
Required B
Manufacturing
Selling and administrative
Contribution margin
Fixed costs
Operating profit
(All revenues and costs in $000)
Status Quo
Alternative
5000 Units
6800 Units
Difference
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