Pine Ridge Electronics Inc. has received a request from a customer to fill a special order for 3,000 units of product X24 at $28 per unit. While the product would need to be slightly modified for the special order, the normal unit product cost of product X24 is $21.00: Cost Item Direct Materials Direct Labor Variable Manufacturing Overhead Fixed Manufacturing Overhead Unit Product Cost Amount per Unit $6.00 $4.00 $3.00 $8.00 $21.00 Direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer also requires modifications that would increase the variable costs by $1.80 per unit and would require an investment of $15,000 in special tools that have no salvage value. This special order would not affect the company's other sales, and Pine Ridge Electronics has ample spare capacity for producing the special order. If the special order is accepted, what will be the impact on Pine Ridge Electronics Inc.'s net operating income?

Pine Ridge Electronics Inc. has received a request from a customer to fill a special order for 3,000 units of product X24 at $28 per unit. While the product would need to be slightly modified for the special order, the normal unit product cost of product X24 is $21.00: Cost Item Direct Materials Direct Labor Variable Manufacturing Overhead Fixed Manufacturing Overhead Unit Product Cost Amount per Unit $6.00 $4.00 $3.00 $8.00 $21.00 Direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer also requires modifications that would increase the variable costs by $1.80 per unit and would require an investment of $15,000 in special tools that have no salvage value. This special order would not affect the company's other sales, and Pine Ridge Electronics has ample spare capacity for producing the special order. If the special order is accepted, what will be the impact on Pine Ridge Electronics Inc.'s net operating income?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 1PB: The following product costs are available for Stellis Company on the production of erasers: direct...

See similar textbooks

Similar questions

The following product Costs are available for Haworth Company on the production of chairs: direct materials, $15,500; direct labor, $22.000; manufacturing overhead, $16.500; selling expenses, $6,900; and administrative expenses, $15,200. What are the prime costs? What are the conversion costs? What is the total product cost? What is the total period cost? If 7,750 equivalent units are produced, what is the equivalent material cost per unit? If 22,000 equivalent units are produced, what is the equivalent conversion cost per unit?
The following product costs are available for Kellee Company on the production of eyeglass frames: direct materials, $32,125; direct labor, $23.50; manufacturing overhead, applied at 225% of direct labor cost; selling expenses, $22,225; and administrative expenses, $31,125. The direct labor hours worked for the month are 3,200 hours. A. What are the prime costs? B. What are the conversion costs? C. What is the total product cost? D. What is the total period cost? E. If 6.425 equivalent units are produced, what is the equivalent material cost per unit? F. What is the equivalent conversion cost per unit?
Cozy, Inc., manufactures small and large blankets. It estimates $350,000 in overhead during the manufacturing of 75,000 small blankets and 25,000 large blankets. What is the predetermined overhead rate if a small blanket takes 1 machine hour and a large blanket takes 2 machine hours?
A customer has requested that Lewelling Corporation fill a special order for 2,900 units of product S47 for $31 a unit. The normal selling price of the product is $30.40 a unit. While the product would be modified slightly for the special order, product S47's normal unit product cost is $19.00: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $ 5.30 4.00 2.40 7.30 $19.00 Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product S47 that would increase the variable costs by $1.20 per unit and that would require an investment of $15,000.00 in special molds that would have no salvage value. Due to capacity constaints, this special order would result in a loss of regular sales of 725 units. The annual financial advantage (disadvantage) for the company as a result of accepting this special order…
Wehes Corporation has received a request for a special order of 9.200 units of product K19 for $4610 each. The normal selling price of this product is $51.20 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product K19 is computed as follows Direct materials Direct Jabor Variable manufacturing overhead Fixed Manufacturing overhead 5 16.90 6.20 3.40 6.30 $32.00 Direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs The customer would like some modifications made to product K19 that would increase the variable costs by $5 80 per unit and that would require a one-time investment of $45,600 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order Required: Determine the effect on the company's total net operating income of…
Gadubhai
G
Wehrs Corporation has received a request for a special order of 9,900 units of product K19 for $47.40 each. The normal selling price of this product is $52.50 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product K19 is computed as follows: Direct materials. Direct labor Variable manufacturing overhead i Fixed manufacturing overhead Unit product cost $ 18.20 7.50 4.70 7.60 $38.00 Direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like some modifications made to product K19 that would increase the variable costs by $7.10 per unit and that would require a one-time investment of $46,900 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. Required: Determine the effect on the company's total net…
Edalyn Corporation has received a request for a special order of 8,400 units of product Amity for $45.30 each. The normal selling price of this product is $50.40 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product Amity is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost es $16.10 5.40 2.60 5.50 $29.60 Direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like some modifications made to product Amity that would increase the variable costs by $5.00 per unit and that would require a one-time investment of $44,800 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. Required: Determine the effect on the company's total…
Wehrs Corporation has received a request for a special order of 9,800 units of product K19 for $47.50 each. The normal selling price of this product is $52.60 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product K19 is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product.cost $ 18.30 7.60 4.80 7.70 $ 38.40 Direct labor is a varlable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like some modifications made to product K19 that would increase the variable costs by $7.20 per unit and that would require a one-time investment of $47,000 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. Required: Determine the effect on the company's total net…
Following costs and revenue are incurred/earned by Toy inc. on each unit of teddy bear: Selling price Materials $49 $12 Labour $15 Variable overhead Fixed overhead $7 $6 Toy Inc. has received an offer from a customer. The customer is ready to buy 1,500 unitsat $37 each. However, the customer is asking for customized colouring on the teddy bear'spocket, which will require additional $1 per teddy bear. Should the offer from customer be accepted by Toy Inc.? Accept due to Incremental profit of $3,300. Reject due to Incremental loss of $3,000. Accept due to Incremental profit of $3,000 Reject due to incremental loss of $3,300
A customer has requested that Lewelling Corporation fill a special order for 2,500 units of product S47 for $30 a unit. While the product would be modified slightly for the special order, product $47's normal unit product cost is $21.40: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $ 6.10 4.00 3.20 8.10 $21.40 Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product S47 that would increase the variable costs by $1.70 per unit and that would require an investment of $15,000 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. The annual financial advantage (disadvantage) for the company as a result of accepting this special order should be: