On March 1, Marquette is approached by the developer of a large subdivision who wants to install an invisible fence in the yard of 1,200 homes he is constructing. The developer will contract with Marquette for the 1,200 fences on the condition that they are delivered within 30 days (March 31). This is not good timing for Marquette since they have recently signed a contract with Home Warehouse, a national home improvement chain and have been working at 100% capacity for several months. If Marquette accepts the builder’s order, it will lose 1,200 units that would normally be sold to one of its existing customers. When they tell the developer that they do not believe they can fill his order, he offers to reimburse the company for his “share” of the fixed manufacturing costs and will pay a $5,000 “bonus” on delivery. Since the sale to the developer will not incur any variable marketing costs, Marquette reconsiders accepting the developer’s order. What impact will accepting this order have on Marquette’s income in March? Should Marquette accept the order from the developer? Why or Why not? (Show all supporting calculations).(NOTE: ignore taxes or other costs not specifically mentioned in the questions.) Marquette Manufacturing produces "invisible" electric dog fences, sold through retail locations nationwide. Theselling price of the fence is $150 per unit. The cost to manufacture and market the fences is shown below.These figures represent the cost at the company's normal volume of 3,000 units per month.Unit Manufacturing CostsVariable materials $ 15.00Variable labor$ 17.50Variable overhead $ 12.50Fixed overhead$ 16.00Total unit manufacturing costs$ 61.00Unit Marketing CostsVariable$12.00Fixed overhead$17.00Total unit marketing costs2$29.00Total unit costs$ 90.00

Net income means the revenues is remaining after deducting all expenses and taxes during an…

Answered: On March 1, Marquette is approached by…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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On March 1, Marquette is approached by the developer of a large subdivision who wants to install an invisible fence in the yard of 1,200 homes he is constructing. The developer will contract with Marquette for the 1,200 fences on the condition that they are delivered within 30 days (March 31). This is not good timing for Marquette since they have recently signed a contract with Home Warehouse, a national home improvement chain and have been working at 100% capacity for several months. If Marquette accepts the builder’s order, it will lose 1,200 units that would normally be sold to one of its existing customers. When they tell the developer that they do not believe they can fill his order, he offers to reimburse the company for his “share” of the fixed manufacturing costs and will pay a $5,000 “bonus” on delivery. Since the sale to the developer will not incur any variable marketing costs, Marquette reconsiders accepting the developer’s order. What impact will accepting this order have on Marquette’s income in March? Should Marquette accept the order from the developer? Why or Why not? (Show all supporting calculations).

(NOTE: ignore taxes or other costs not specifically mentioned in the questions.)

Marquette Manufacturing produces "invisible" electric dog fences, sold through retail locations nationwide. The
selling price of the fence is $150 per unit. The cost to manufacture and market the fences is shown below.
These figures represent the cost at the company's normal volume of 3,000 units per month.
Unit Manufacturing Costs
Variable materials $ 15.00
Variable labor
$ 17.50
Variable overhead $ 12.50
Fixed overhead
$ 16.00
Total unit manufacturing costs
$ 61.00
Unit Marketing Costs
Variable
$
12.00
Fixed overhead
$
17.00
Total unit marketing costs
2$
29.00
Total unit costs
$ 90.00

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