**Cost Analysis and Decision-Making for Orange Bliss Products****Overview:** Orange Bliss, a manufacturing company, produces two products: Frozen, priced at $80, and Rocks, priced at $60. The company achieved a production level of 100,000 units last year. Below is a breakdown of the average cost per unit for each product.**Cost Breakdown (per unit):**| Cost Type | Frozen | Rocks ||-----------------------------|--------|-------|| Direct Materials | $20 | $15 || Direct Labor | $18 | $12 || Variable Manufacturing Overhead | $7 | $12 || Traceable/Avoidable Fixed | $15 | $13 || Variable Selling & Admin | $5 | $3 || Allocated/Unavoidable Fixed | $12 | $7 || Total Cost Per Unit | ______ | _____ |**New Order Inquiry:**Orange Bliss received a special order request from the Bartender's Association of America for 10,379 units of "Rocks" at a price of $61 each. This order can be fulfilled without affecting regular customer demand, and no additional fixed costs will be incurred. Variable selling costs for this order remain consistent with regular production.**Decision-Making Consideration:**To evaluate whether to accept the order, Orange Bliss needs to assess the financial advantage or disadvantage. **Calculation Process for Decision:**1. **Calculate Variable Costs for "Rocks":** - Add Direct Materials, Direct Labor, and Variable Manufacturing Overhead. - Include Variable Selling & Admin expenses.2. **Determine Contribution Margin:** - Subtract total variable costs from the offered price ($61).3. **Analyze the Impact:** - Calculate the overall profit or loss by multiplying the contribution margin by 10,379 units. - Round to the nearest whole number. - Express any financial disadvantage as a negative value.By performing these calculations, Orange Bliss can determine the financial impact of accepting the Bartender's Association order.

Relevant costs are primarily considered for three major decisions i.e. for buying or selling,…

Answered: Orange Bliss manufactures two products,…

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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Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 44,000 Rets per year. Costs associated with this level of production and sales are given below: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense Total cost Unit $ 25 8 3 7 4 6 $53 Total $ 1,100,000 352,000 1. 2. 3. 132,000 308,000 176,000 264,000 $ 2,332,000 The Rets normally sell for $58 each. Fixed manufacturing overhead is $308,000 per year within the range of 37,000 through 44,000 Rets per year. Required: 1. Assume that due to a recession, Polaski Company expects to sell only 37,000 Rets through regular channels next year. A large retall chain has offered to purchase 7,000 Rets If Polaski is willing to accept a 16% discount off the regular price. There would be no sales commissions on this order, thus, variable selling expenses would be slashed by 75%. However, Polaski…
Orange Bliss manufactures two products, Frozen and Rocks, that sell for $80 and $40 respectively. The company produced 10,000 units last year and at that level of activity, the average cost per unit were: Frozen Rocks direct materials $20 $15 direct labor $18 $12 variable manu. $20 $12 overhead traceable/avoidable $15 $13 fixed variable selling & $ 5 $ 6 admin allocated/unavoidable $12 $2 fixed total cost per unit $ $ 13 Orange Bliss has had low volume in Rocks (2,000 units sold) for some time and is considering dropping that product line. What is the advantage (disadvantage) of dropping this product line? Round to nearest whole number with disadvantage expressed as a negative
对 a Required Information [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $225 and $175, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 130,000 units of each product Its average cost per unit for each product at this level of activity are given below. Alpha. $ 42 Beta 2424 32 Direct materials Direct labor Variable manufacturing overhead, Traceable fixed manufacturing overhead, Variable selling expenses, Common fixed expenses 42 26. 34 24 27. 29. 34 Total cost per unit The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 12. What contribution margin per pound of raw material is earned by each of the two products? (Round your answer to 2 declmal Beta Contribution margin…
Royal Lawncare Company produces and sells two packaged products-Weedban and Greengrow. Revenue and cost information relating to the products follow: Selling price per unit Variable expenses per unit Traceable fixed expenses per year Weedban $9.00 $ 3.10 $ 133,000 Product Greengrow $34.00 $12.00 $ 36,000 Last year the company produced and sold 44,000 units of Weedban and 19,000 units of Greengrow. Its annual common fixed expenses are $97,000. Required: Prepare a contribution format income statement segmented by product lines. Total Company Product Line Weedban Greengrow
Required information [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $195 and $150, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 123,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha $ 40 Beta Direct materials $ 15 Direct labor 34 28 Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses 22 20 30 33 27 23 Common fixed expenses 30 25 Total cost per unit $183 $ 144 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 3. Assume that Cane expects to produce and sell 95,000 Alphas during the current year. One of Cane's sales representatives has found a new…
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Required information [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $120 and $80, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 100,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Direct materials Direct labor Alpha $ 30 Beta $ 12 20 Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses 15 5 16 18 12 8 15 10 Total cost per unit $ 100 $ 68 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 5. Assume that Cane expects to produce and sell 95,000 Alphas during the current year. One of Cane's sales representatives has found a new customer…
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