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Rowe Tool and Die (RTD) produces metal fittings as a supplier to various manufacturing firms in the area. The following is the forecasted income statement for the next quarter, which is the typical planning horizon used at RTD. RTD expects to sell 45,000 units during the quarter. RTD carries no inventories. Sales revenue Costs of fitting produced Gross profit Administrative costs Operating profit Required A Fixed costs included in this income statement are $292,500 for depreciation on plant and machinery and miscellaneous factory operations and $94,500 for administrative costs. RTD has received a request for 10,000 fittings to be produced in the next quarter from Endicott Manufacturing. Endicott has never purchased from RTD, although they have been a local company for many years. Endicott has offered to pay $20 per unit. RTD can easily produce the 10,000 units with its existing capacity. Production of the 10,000 units will incur all variable manufacturing costs but no fixed manufacturing costs. No administrative costs will be incurred because of the order. Amount $ 1,170,000 900,000 Required: a. What impact would accepting this special order have on operating profit? b. Should RTD accept the order? Sales revenue Variable costs: $ 270,000 207,000 $ 63,000 Complete this question by entering your answers in the tabs below. Required B Production Administrative Contribution margin Fixed costs Operating profit Per Unit $26.00 20.00 $6.00 4.60 $ 1.40 What impact would accepting this special order have on operating profit? (Enter your answers in thousands rounded to 1 decimal place. (i.e., 5,400,400 should be entered as 5,400.4). Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) Status Quo 45,000 Alternative 55,000 Units Units $ 1,170,000.0 S $ 270,000 Costs and Revenues (Thousands of Dollars) 63,000.0 $ < Required A 26.0 $ 45,000.0 6 Difference 1.4 Required B >

Rowe Tool and Die (RTD) produces metal fittings as a supplier to various manufacturing firms in the area. The following is the forecasted income statement for the next quarter, which is the typical planning horizon used at RTD. RTD expects to sell 45,000 units during the quarter. RTD carries no inventories. Sales revenue Costs of fitting produced Gross profit Administrative costs Operating profit Required A Fixed costs included in this income statement are $292,500 for depreciation on plant and machinery and miscellaneous factory operations and $94,500 for administrative costs. RTD has received a request for 10,000 fittings to be produced in the next quarter from Endicott Manufacturing. Endicott has never purchased from RTD, although they have been a local company for many years. Endicott has offered to pay $20 per unit. RTD can easily produce the 10,000 units with its existing capacity. Production of the 10,000 units will incur all variable manufacturing costs but no fixed manufacturing costs. No administrative costs will be incurred because of the order. Amount $ 1,170,000 900,000 Required: a. What impact would accepting this special order have on operating profit? b. Should RTD accept the order? Sales revenue Variable costs: $ 270,000 207,000 $ 63,000 Complete this question by entering your answers in the tabs below. Required B Production Administrative Contribution margin Fixed costs Operating profit Per Unit $26.00 20.00 $6.00 4.60 $ 1.40 What impact would accepting this special order have on operating profit? (Enter your answers in thousands rounded to 1 decimal place. (i.e., 5,400,400 should be entered as 5,400.4). Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) Status Quo 45,000 Alternative 55,000 Units Units $ 1,170,000.0 S $ 270,000 Costs and Revenues (Thousands of Dollars) 63,000.0 $ < Required A 26.0 $ 45,000.0 6 Difference 1.4 Required B >

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Rowe Tool and Die (RTD) produces metal fittings as a supplier to various manufacturing firms in the area. The following is the forecasted income statement for the next quarter, which is the typical planning horizon used at RTD. RTD expects to sell 45,000 units during the quarter. RTD carries no inventories. Sales revenue Costs of fitting produced Gross profit Administrative costs Operating profit Fixed costs included in this income statement are $292,500 for depreciation on plant and machinery and miscellaneous factory operations and $94,500 for administrative costs. RTD has received a request for 10,000 fittings to be produced in the next quarter from Endicott Manufacturing. Endicott has never purchased from RTD, although they have been a local company for many years. Endicott has offered to pay $20 per unit. RTD can easily produce the 10,000 units with its existing capacity. Production of the 10,000 units will incur all variable manufacturing costs but no fixed manufacturing costs. No administrative costs will be incurred because of the order. Required: a. What impact would accepting this special order have on operating profit? b. Should RTD accept the order? Required A Complete this question by entering your answers in the tabs below. Amount $ 1,170,000 $ 900,000 270,000 207,000 $ 63,000 Sales revenue Variable costs: Required B Production Administrative Per Unit $26.00 20.00 $6.00 4.60 $ 1.40 What impact would accepting this special order have on operating profit? (Enter your answers in thousands rounded to 1 decimal place. (i.e., 5,400,400 should be entered as 5,400.4). Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) Contribution margin Fixed costs Operating profit Status Quo 45,000 Units $ 1,170,000.0 $ $ 270,000 Alternative 55,000 Units Costs and Revenues (Thousands of Dollars) 63,000.0 $ < Required A 26.0 $ 45,000.0 6 Difference 1.4 Required B >
Transcribed Image Text:Rowe Tool and Die (RTD) produces metal fittings as a supplier to various manufacturing firms in the area. The following is the forecasted income statement for the next quarter, which is the typical planning horizon used at RTD. RTD expects to sell 45,000 units during the quarter. RTD carries no inventories. Sales revenue Costs of fitting produced Gross profit Administrative costs Operating profit Fixed costs included in this income statement are $292,500 for depreciation on plant and machinery and miscellaneous factory operations and $94,500 for administrative costs. RTD has received a request for 10,000 fittings to be produced in the next quarter from Endicott Manufacturing. Endicott has never purchased from RTD, although they have been a local company for many years. Endicott has offered to pay $20 per unit. RTD can easily produce the 10,000 units with its existing capacity. Production of the 10,000 units will incur all variable manufacturing costs but no fixed manufacturing costs. No administrative costs will be incurred because of the order. Required: a. What impact would accepting this special order have on operating profit? b. Should RTD accept the order? Required A Complete this question by entering your answers in the tabs below. Amount $ 1,170,000 $ 900,000 270,000 207,000 $ 63,000 Sales revenue Variable costs: Required B Production Administrative Per Unit $26.00 20.00 $6.00 4.60 $ 1.40 What impact would accepting this special order have on operating profit? (Enter your answers in thousands rounded to 1 decimal place. (i.e., 5,400,400 should be entered as 5,400.4). Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) Contribution margin Fixed costs Operating profit Status Quo 45,000 Units $ 1,170,000.0 $ $ 270,000 Alternative 55,000 Units Costs and Revenues (Thousands of Dollars) 63,000.0 $ < Required A 26.0 $ 45,000.0 6 Difference 1.4 Required B >
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