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?
Vanguard Electric Product will use its own plant to produce a new product. The new product would be sold through agents at a 10% commission based on a selling price of $40 each. The unit costs of the new product, based on predicted yearly normal volume, are as follows: Direct materials Direct labor Variable overhead Fixed overhead (total for the year: $300,000) Manufacturing costs $6 12 8 6 $32
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
Agta Enterprises manufactures a product that sells for R180 each. The company presently produces and sells 50 000 units per year. Unit variable manufacturing and selling expenses are R90 and R18 respectively. Annual fixed costs are R2 200 000 for manufacturing overheads and R1 040 000 for selling and administrative activities Suppose the marketing manager proposes that the selling price be increased to R198 per unit. Calculate the amount by which fixed costs must decrease in order to achieve the company’s profit objective of R1 800 000, if 50 000 units are sold.
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.
Cleveland Corporation Manufactures Can product from a process that yields a by-product called FIZZ. The by-product requires additional processing cost of $30,000. The by-product will require selling and administrative expenses totaling $20,000. It is Cleveland's accounting policy to charge the joint costs to the main product only. Information concerning a batch produced during the year ended December 31, 2020 follows: Product Units Produced Market Value at Split Units Sold Off 100,000 8,000 The joint costs incurred up to split-off point are: Can FIZZ $50 $10 60,000 8,000 Direct materials $2,000,000 Direct labor 800,000 Factory overhead 200,000 The selling and administrative expense of Cleveland Corporation for the year ended December 31, 2020 is $1,000,000 exclusive of that for the by-product. Required: 1. What is the gross profit for the year if the net revenue from by-product is presented as other income? 2. What is the gross profit for the year if the net revenue from by=-product is…
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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
Stripe Company has been purchasing a component, Part Q, for P19.20 per unit. Stripe is currently operating at 70% of capacity, and no significant increase in production is anticipated in the near future. The cost of manufacturing a unit of Part Q is estimated as follows: Direct materials P11.50 Direct labor 4.50 Variable factory overhead 1.12 Fixed factory overhead 3.15 Total P20.27 Should the company make or buy the component? Prepare a differential analysis report dated March 12 of the current year to support your answer.
Lucifer Company sells its product A at a selling price of P42 per unit. Lucifer’s costs per unit basedon the full capacity of 200,000 units are as follows:Direct materials P 8.00Direct labor 10.00Overhead 12.00Overhead costs were 40% fixed. A special order offering to buy 40,000 units were received from aforeign distributor. The only selling costs that would be incurred amounts to P6 per unit for shipping(as oppose to P12 per unit on regular customers). Lucifer has sufficient existing capacity tomanufacture the additional units. a. What is the minimum selling price per unit that the Company may accept? b. Assume that the company is already operating at full capacity and could only accommodate theforeign distributor only by cancelling sales from regular customers, what would be the minimumselling price?

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