Nore Milling Co. has a plant capacity of 40,000 units per month. Unit cost capacityare:Direct materialsDirect laborVariable overheadFixed overheadMarketing fixed costMarketing variable costP100150757517590Present monthly sales are 39,000 units at P630 each. Josh Corporation contactedNore about purchasing 1,000 units at P600 each. The present sales would not beaffected by the special order. Nore shouldAccept the special order due to P215,000 incremental incomeAccept the special order due to P110,000 incremental incomeAccept the special order due to P185,000 incremental incomeAccept the special order due to P10,000 incremental income

A special order is an order that is received by a company other than its normal order. Some special…

Answered: Nore Milling Co. has a plant capacity…

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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Capitol, Incorporated, has received a special order for 2,080 units of its product at a special price of $158. The product normally sells for $208 and has the following manufacturing costs: Cost per Unit Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total unit cost $ 58 38 28 48 $ 172 Assume that Capitol has sufficient capacity to fill the order without harming normal production and sales. Required: a. If Capitol accepts the order, what effect will the order have on the company's short-term profit? b. What minimum unit price should Capitol charge to achieve a $48,000 incremental profit? c. Now, assume Capitol is currently operating at full capacity and cannot fill the order without harming normal production and sales. If Capitol accepts the order, what effect will the order have on the company's short-term profit? Complete this question by entering your answers in the tabs below. Required A Required B Required C If Capitol accepts the order,…
Every year Marigold Industries manufactures 6,100 units of part 231 for use in its production cycle. The per unit costs of part 231 are as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total (a) Total relevant cost to make $ $4.00 Net relevant cost to buy 10.00 Carla Vista, Inc., has offered to sell 6,100 units of part 231 to Marigold for $34 per unit. If Marigold accepts Carla Vista's offer, its freed-up facilities could be used to earn $10,700 in contribution margin by manufacturing part 240. In addition, Marigold would eliminate 40% of the fixed overhead applied to part 231. $ 6.00 10.00 Calculate total relevant cost to make and net cost to buy. $30.00
Beta makes a component used in its engine. Monthly production costs for 1,000 component units are as follows: Direct materials $46,000 Direct labor 11,500 Variable overhead costs 34,500 Fixed overhead costs 23,000 Total costs $115,000 It is estimated that 8% of the fixed overhead costs will no longer be incurred if the company purchases the component from an outside supplier. Beta has the option of purchasing the component from an outside supplier at $97.75 per unit. 22) If Beta accepts the offer from the outside supplier, the monthly avoidable costs (costs that will no longer be incurred) total 23) If Beta purchases 1,000 units from the outside supplier per month, then what would be the change in operating income?
Day Star collected the following information: Cost to buy one unit Production costs per unit: Direct materials Direct labour Variable overhead Total fixed overhead Day Star can sell 25,000 units per year, at $80 each. The company also has an offer from a subsidiary to rent its plant facilities for $2,000,000. The fixed overhead will be incurred in each alternative, but there will be a savings of $150,000 in the fixed costs under the renting alternative. A) buy Based on the above information only, should Day Star make or buy the product or rent its facilities out? B) make $22 $16 $2 $360,000 C) either make or buy - indifferent $48 D) rent the facilities to the subsidiary E) either make or rent - indifferent
Liguanea Pharmaceuticals Limited (LPL) currently sells a product the “sovereign” for $2200. This price is based on annual demand. Analysis indicates that if the company increase the price by $100 annual demand will fall by 400 units. At the current price 4,000 units are demanded. The product has the following cost structure per unit: Direct material $225 Direct labour $75 Direct expenses $150 Variable overheads $90 Fixed overheads $300 Variable selling expense $60 Fixed selling expenses $450 Management wants to know the optimal production quantity and its maximum profits. Determine the price equation Determine the optimal price and quantity Determine the optimal profits.
Please help me
Session Company uses 5,000 units of Part Y each year as a component in the assembly of one of its products. The company is presently producing Part Y internally at a total cost of $72,000 as follows: Direct materials $18,000 Direct labor $20,000 Variable MOH $10,000 Fixed MOH $24,000 Total costs $72,000 An outside supplier has offered to provide Part Y at a price of $12 per unit. If Session Company stops producing the part internally, one-third of the fixed manufacturing overhead would be eliminated. Accepting the outside supplier's offer leads to an annual advantage/disadvantage of: Advantage of $4,000 Disadvantage of $4,000 Disadvantage of $12,000 Advantage of $12,000
Minor Electric has received a special one-time order for 1,500 light fixtures (units) at $5 per unit. Minor currently produces and sells 7,500 units at $6.00 each. This level represents 75% of its capacity. Production costs for these units are $4.50 per unit, which includes $3.00 variable cost and $1.50 fixed cost. To produce the special order, a new machine needs to be purchased at a cost of $1,000 with a zero salvage value. Management expects no other changes in costs as a result of the additional production. If Minor wishes to earn $1,250 on the special order, the size of the order would need to be:
After several years producing and selling at a capacity of 50,000 units, Milton Company faced a year with projected sales and production of 38,000 units. A potential customer offered to purchase 7,000 units at a price of P18 each. The normal sales price is P30 each. Direct material P9.00 Direct labor 6.50 Variable manufacturing overhead 2.00 Fixed manufacturing overhead 3.75 Total P21.25 Should Milton accept the order? Justify your answer.
Steve company produces 30000 units of parts each year for use on its production line. The cost per units of the part S6: Direct material $3.60 Direct labor $10.00 Variable manufacturing overhead $2.40 Fixed manufacturing overhead $9.00 Total cost per part$25.00 An outside supplier has offered to sell 30000 units of the part each year at a product company at $21.00 per part. If the products company accepts this offer, the facilities now being used to manufacturer the parts could be rented by another company at the annual rent of $80,000.00. However, the products have determined that two-thirds of the fixed manufacturing overhead being applied to the part would continue even if the part S6 was purchased by an outside supplier. What is the advantage or disadvantage of accepting the outside supplier's offer? and how much ?
Every year Blue Industries manufactures 7,300 units of part 231 for use in its production cycle. The per unit costs of part 231 are as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total (a) $3.00 Total relevant cost to make $ 11.00 Net relevant cost to buy $ 8.00 Cullumber, Inc., has offered to sell 7,300 units f part 231 to Blue for $33 per unit. If Blue accepts Cullumber's offer, its freed-up facilities could be used to earn $10,700 in contribution margin by manufacturing part 240. In addition, Blue would eliminate 50% of the fixed overhead applied to part 231. 10.00 $32.00 Calculate total relevant cost to make and net cost to buy.
Cool Air Inc., manufactures single room sized air conditioners. The cost accounting system estimates manufacturing costs to be $230 per air conditioner, consisting of 60% variable costs and 40% fixed costs. The company has surplus capacity available. It is Cool Air Inc.'s policy to add a 30% markup to full costs. Cool Air Inc., is invited to bid on a one-time-only special order to supply 110 air conditioners. What is the lowest price Cool Air Inc. should bid on this special order? A. $25,300 B. $32,890 C. $15,180 D. $35,420

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