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 53,000 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 $344,500 for depreciation on plant and machinery and miscellaneous factory operations and $98,500 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 $20.80 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? Complete this question by entering your answers in the tabs below. Sales revenue Variable costs: Amount $ 1,505,200 1,144,800 $360,400 265,000 $ 95,400 Required B Production Administrative Per Unit $28.40 21.60 $6.80 5.00 $ 1.80 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 Costs and Revenues (Thousands of Dollars) Status Quo 53,000 Alternative 63,000 Units Units Difference
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 53,000 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 $344,500 for depreciation on plant and machinery and miscellaneous factory operations and $98,500 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 $20.80 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? Complete this question by entering your answers in the tabs below. Sales revenue Variable costs: Amount $ 1,505,200 1,144,800 $360,400 265,000 $ 95,400 Required B Production Administrative Per Unit $28.40 21.60 $6.80 5.00 $ 1.80 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 Costs and Revenues (Thousands of Dollars) Status Quo 53,000 Alternative 63,000 Units Units Difference
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please do not give image format
Transcribed Image Text:Required:
a. What impact would accepting this special order have on operating profit?
b. Should RTD accept the order?
Complete this question by entering your answers in the tabs below.
Required A Required B
Should RTD accept the order?
Should RTD accept the order?
< Required A
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 53,000 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 $344,500 for depreciation on plant and machinery and miscellaneous factory
operations and $98,500 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 $20.80 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.
Sales revenue
Variable costs:
Amount
$ 1,505, 200
Required:
a. What impact would accepting this special order have on operating profit?
b. Should RTD accept the der?
Complete this question by entering your answers in the tabs below.
Required B
Production
Administrative
1,144,800
$360,400
265,000
$ 95,400
Per Unit
Contribution margin
Fixed costs
Operating profit
$28.40
21.60
$6.80
5.00
$ 1.80
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.)
Costs and Revenues
(Thousands of Dollars)
Status Quo 53,000 Alternative 63,000
Units
Units
Difference
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