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orice charged to the distributor? Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B1 Req B2 What is your interpretation of the changes to the contribution rnargin per unit and the operating income on account of the unit price charged to the distributor? (Do not round intermediate calculations.) In order for the company to increase its operating income $60,000 above what it would be without the order, the contribution margin per unit included with the special order must be $2 per unit more ($2 × 30,000 units = $60,000) than the normal contribution margin. The normal contribution margin is the sales price, $28, less all variable costs [ +(2/3 x 1, or $12. Thus, the selling price of the special order must cover the additional shipping costs, and still result in a contribution margin of normal + $2 additional requirement). Therefore, a selling price of is required. < Req B1 Req 82 1 of 4 ... < Prev Next > ... NOV 17 étv li 1 A

orice charged to the distributor? Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B1 Req B2 What is your interpretation of the changes to the contribution rnargin per unit and the operating income on account of the unit price charged to the distributor? (Do not round intermediate calculations.) In order for the company to increase its operating income $60,000 above what it would be without the order, the contribution margin per unit included with the special order must be $2 per unit more ($2 × 30,000 units = $60,000) than the normal contribution margin. The normal contribution margin is the sales price, $28, less all variable costs [ +(2/3 x 1, or $12. Thus, the selling price of the special order must cover the additional shipping costs, and still result in a contribution margin of normal + $2 additional requirement). Therefore, a selling price of is required. < Req B1 Req 82 1 of 4 ... < Prev Next > ... NOV 17 étv li 1 A

FINANCIAL ACCOUNTING
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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Exercise 21.12 (Static) Pricing a Special Order (LO21-1, LO21-2, LO21-3) Mazeppa Corporation sells relays at a selling price of $28 per unit. The company's cost per unit, based on full capacity of 160,000 units, is as follows: Direct materials Direct labor Overhead (2/3 of which is variable) Mazeppa has been approached by a distributor in Montana offering to buy a special order consisting of 30,000 relays. Mazeppa has the capacity to fill the order. However, it will incur an additional shipping cost of $2 for each relay it sells to the distributor. a-1. Assume that Mazeppa is currently operating at a level of 100,000 units. Show the calculation for the unit price to charge the distributor which will generate an increase in operating income of $2 per unit? a-2. What is your interpretation of the changes to the contribution margin per unit and the operating income on account of the unit price charged to the distributor? b-1. Assume that Mazeppa is currently operating at full capacity. Show the calculation for the unit price to charge the distributor which will generate an increase in operating income of $60,000 more than it would be without accepting the special order? b-2. What is your interpretation of the changes to the contribution margin per unit and the operating income on account of the unit price charged to the distributor? Complete this question by entering your answers in the tabs below. Req A1 Req A2 Reg B1 Req B2 Prev 1 of 4 Next > 23 NOV al T2 A 17 tv 280 649 %24
Transcribed Image Text:Exercise 21.12 (Static) Pricing a Special Order (LO21-1, LO21-2, LO21-3) Mazeppa Corporation sells relays at a selling price of $28 per unit. The company's cost per unit, based on full capacity of 160,000 units, is as follows: Direct materials Direct labor Overhead (2/3 of which is variable) Mazeppa has been approached by a distributor in Montana offering to buy a special order consisting of 30,000 relays. Mazeppa has the capacity to fill the order. However, it will incur an additional shipping cost of $2 for each relay it sells to the distributor. a-1. Assume that Mazeppa is currently operating at a level of 100,000 units. Show the calculation for the unit price to charge the distributor which will generate an increase in operating income of $2 per unit? a-2. What is your interpretation of the changes to the contribution margin per unit and the operating income on account of the unit price charged to the distributor? b-1. Assume that Mazeppa is currently operating at full capacity. Show the calculation for the unit price to charge the distributor which will generate an increase in operating income of $60,000 more than it would be without accepting the special order? b-2. What is your interpretation of the changes to the contribution margin per unit and the operating income on account of the unit price charged to the distributor? Complete this question by entering your answers in the tabs below. Req A1 Req A2 Reg B1 Req B2 Prev 1 of 4 Next > 23 NOV al T2 A 17 tv 280 649 %24
bričé chárged to the distributor? Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B1 Req B2 What is your interpretation of the changes to the contribution nargin per unit and the operating income on account of the unit price charged to the distributor? (Do not round intermediate calculations.) In order for the company to increase its operating income $60,000 above what it would be without the order, the contribution margin per unit included with the special order must be $2 per unit more ($2 × 30,000 units = $60,000) than the normal contribution margin. The normal contribution margin is the sales price, $28, less all variable costs [ + (2/3 x ], or $12. Thus, the selling price of the special order must cover the additional shipping costs, and still result in a contribution margin of normal + $2 additional requirement). Therefore, a selling price of is required. < Req B1 Req B2> Prev 1 of 4 Next > 23 國 2囚 NOV 17 étv 280 MacBook Air
Transcribed Image Text:bričé chárged to the distributor? Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B1 Req B2 What is your interpretation of the changes to the contribution nargin per unit and the operating income on account of the unit price charged to the distributor? (Do not round intermediate calculations.) In order for the company to increase its operating income $60,000 above what it would be without the order, the contribution margin per unit included with the special order must be $2 per unit more ($2 × 30,000 units = $60,000) than the normal contribution margin. The normal contribution margin is the sales price, $28, less all variable costs [ + (2/3 x ], or $12. Thus, the selling price of the special order must cover the additional shipping costs, and still result in a contribution margin of normal + $2 additional requirement). Therefore, a selling price of is required. < Req B1 Req B2> Prev 1 of 4 Next > 23 國 2囚 NOV 17 étv 280 MacBook Air
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