Sato Awards has had a request for a special order of 10 silver-plated trophies from the provincial tennis association. The normal selling price of such a trophy is $423.00 and its unit product cost is $282.00, as shown below: Direct materials Direct labour Hanufacturing overhead Unit product cost Most of the manufacturing overhead is fixed and unaffected by variations in how many trophies are produced in any given period. However, $8 of the overhead is variable, depending on the number of trophies produced. The customer would like a special logo applied to the trophies requiring additional materials costing $7 per trophy and would also require acquisition of a special tool costing $570 that would have no other use once the special order was completed. This order would have no effect on the company's regular sales, and the order could be filled using the company's existing capacity without affecting any other order. $154.00 96.00 32.00 $282.00 Required: a. What effect would accepting this order have on the company's operating income if a special price of $378.00 is offered per trophy for this order? (Do not round intermediate calculations. Round your answer to 2 decimal places.) operating income Yes No by b. Should the special order be accepted at this price? < Prev 8 of 9 Next >
Sato Awards has had a request for a special order of 10 silver-plated trophies from the provincial tennis association. The normal selling price of such a trophy is $423.00 and its unit product cost is $282.00, as shown below: Direct materials Direct labour Hanufacturing overhead Unit product cost Most of the manufacturing overhead is fixed and unaffected by variations in how many trophies are produced in any given period. However, $8 of the overhead is variable, depending on the number of trophies produced. The customer would like a special logo applied to the trophies requiring additional materials costing $7 per trophy and would also require acquisition of a special tool costing $570 that would have no other use once the special order was completed. This order would have no effect on the company's regular sales, and the order could be filled using the company's existing capacity without affecting any other order. $154.00 96.00 32.00 $282.00 Required: a. What effect would accepting this order have on the company's operating income if a special price of $378.00 is offered per trophy for this order? (Do not round intermediate calculations. Round your answer to 2 decimal places.) operating income Yes No by b. Should the special order be accepted at this price? < Prev 8 of 9 Next >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:Sato Awards has had a request for a special order of 10 silver-plated trophies from the provincial tennis association. The normal selling
price of such a trophy is $423.00 and its unit product cost is $282.00, as shown below:
Direct materials
Direct labour
Hanufacturing overhead
Unit product cost
Most of the manufacturing overhead is fixed and unaffected by variations in how many trophies are produced in any given period.
However, $8 of the overhead is variable, depending on the number of trophies produced. The customer would like a special logo
applied to the trophies requiring additional materials costing $7 per trophy and would also require acquisition of a special tool costing
$570 that would have no other use once the special order was completed. This order would have no effect on the company's regular
sales, and the order could be filled using the company's existing capacity without affecting any other order.
$154.00
96.00
32.00
$282.00
Required:
a. What effect would accepting this order have on the company's operating income if a special price of $378.00 is offered per trophy
for this order? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
operating income
Yes
No
by
b. Should the special order be accepted at this price?
< Prev
8 of 9
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