SpecialOrderPope Company manufactures a variety of hiking boots and has received a special one-time-only order from a new customer. Pope has sufficient idle capacity to accept the special order to manufacture 800 pairs of boots at a price of$48.00 per pair. Pope's normal selling price is $65.00 per pair of boots. Variable manufacturing costs are $35.00 per pair and fixed manufacturing costs are $12.00 a pair. Pope's variable selling expense for its normal line of boots is $1.00per pair.What would the effect on Pope's operating income be if the company accepted the special order?Pope's operating income would✰ by $ 0if the order was accepted.

Income statement is a financial statement that shows profitability, total revenue and total expenses…

Answered: Special Order Pope Company manufactures…

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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Cypress Inc. manufactures wooden canoes. Cypress normally sells the canoes for $2,700 per unit. A major distributor has offered to buy 1,000 units at a reduced price. At its budgeted annual production level of 18,000 units, Cypress' per-unit manufacturing costs are as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead $950 $200 $330 $450 Cypress would have to produce the special order on an overtime shift, which would increase the direct labor costs to $300 per unit. The special order would not impact Cypress' fixed costs. However, if Cypress accepts the special order, it will also incur $60,000 in additional, one-time costs in connection with the order. What is the minimum per-unit selling price that Cypress must charge to break even on the special order? Round to the nearest whole dollar and do not enter a dollar sign or a decimal point (e.g., enter 89, not $89.00).
Perry, Inc. manufactures metal stampings for automobiles: stick shifts and trim kits. Fixed costs are $146,000. Each stick shift sells for $10 and has variable costs of $8; each trim kit sells for $9 and has variable costs of $5. What are the contribution margins per unit and contribution ratios for door handles and trim kits? If Perry sells 30,000 stick shifts and 45,000 trim kits, what is operating income? How many stick shifts and trim kits must be sold for Perry to break even?
Diamond Boot Factory normally sells its specialty boots for $23 a pair. An offer to buy 105 boots for $16 per pair was made by an organization hosting a national event in Norfolk. The variable cost per boot is $8, and special stitching will add another $3 per pair to the cost. Determine the differential income or loss per pair of boots from selling to the organization.$ Should Diamond Boot Factory accept or reject the special offer?
Use this information for Falcon Co. to answer the question that follow. Falcon Co. produces a single product. Its normal selling price is $25 per unit. The variable costs are $15 per unit. Fixed costs are $18,800 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,580 units with a special price of $21 per unit. Falcon has the capacity to handle the special order, and for this order, a variable selling cost of $2 per unit would be eliminated. If the order is accepted, what would be the impact on net income? a.increase of $10,112 b.increase of $16,432 c.decrease of $7,584 d.increase of $12,640
The Comfy Company manufactures slippers and sells them at $11 a pair. Variable manufacturing cost is a $5 pair, and allocated fixed manufacturing cost is a $3 pair. It has enough idle capacity available to accept a one-time-only special order of 5000 pairs of slippers at $8 a pair. Comfy will not incur any marketing costs as a result of the special order. What would the effect on operating income be if the special order could be accepted without affecting normal sales: (a) $0, (b) $15000 increase, (c) $25000 increase, or (d) $40000 increase? Show your calculations. The HoustonCompany manufactures Part No. 498 for use in its production line. The manufacturing cost per unit for 25,000units of Part No. 498 is as follows: Direct materials $4 Variable direct manufacturing labor 38 Variable manufacturing overhead 15 Fixed manufacturing overhead allocated 18 Total manufacturing cost per unit $75 The Cushion Company has offered to sell…
Diamond Boot Factory normally sells its specialty boots for $35 a pair. An offer to buy 125 boots for $31 per pair was made by an organization hosting a national event in Norfolk. The variable cost per boot is $12, and special stitching will add another $2 per pair to the cost. Determine the differential income or loss per pair of boots from selling to the organizatio
Harvey Automobiles uses a standard part in the manufacture of several of its trucks. The cost of producing 40,000 parts is $130,000, which includes fixed costs of $90,000 and variable costs of $40,000. The company can buy the part from an outside supplier for $3.30 per unit, and avoid 30% of the fixed costs. Assume that factory space freed up by purchasing the part from an outside source can be used to manufacture another product that can be sold for $179,000 profit. If Harvey Automobiles makes the part, what will its operating income be? $179,000 greater than if the company bought the part $49,000 greater than if the company bought the part $49,000 less than if the company bought the part $79,000 greater than if the company bought the part
Reuben's Deli currently makes rolls for deli sandwiches it produces. It uses 33,000 rolls annually in the production of deli sandwiches. The costs to make the rolls are: Materials $0.23 per roll Labor 0.40 per roll Variable overhead 0.15 per roll Fixed overhead 0.20 per roll A potential supplier has offered to sell Reuben the rolls for $0.88 each. If the rolls are purchased, 30% of the fixed overhead could be avoided. If Reuben accepts the offer, what will the effect on profit be? Reuben would see a $ in profit if he buys the rolls.
Vista Company manufactures electronic equipment. It currently purchases the special switches used in each of its products from an outside supplier. The supplier charges Vista $5.50 per switch. Vista's CEO is considering purchasing either machine A or machine B so the company can manufacture its own switches. The projected data are as follows: Annual fixed costs Variable cost per switch Machine A $632,400 1.78 Required: 1. For each machine, what is the minimum number of switches that Vista must make annually for total costs to equal outside purchase cost? 2. What volume level would produce the same total costs regardless of the machine purchased? 3. What is the most profitable alternative for producing 235,000 switches per year and what is the total cost of that alternative? Required 1 Required 2 Required 3 Complete this question by entering your answers in the tabs below. Machine B $ 860,100 0.80 Minimum number of switches For each machine, what is the minimum number of switches that…
Vista Company manufactures electronic equipment. It currently purchases the special switches used in each of its products from an outside supplier. The supplier charges Vista $5.20 per switch. Vista 's CEO is considering purchasing either machine A or machine B so the company can manufacture its own switches. The projected data are as follows: Machine A Machine B Annual fixed costs $ 582, 450 $ 792, 100 Variable cost per switch 1.67 0.75 Required: 1. For each machine, what is the minimum number of switches that Vista must make annually for total costs to equal outside purchase cost? 2. What volume level would produce the same total costs regardless of the machine purchased? 3. What is the most profitable alternative for producing 230,000 switches per year and what is the total cost of that alternative?
Value Electronics uses a standard part in the manufacture of different types of radios. The total cost of producing 32,000 parts is $90,000, which includes fixed costs of $30,000 and variable costs of $60,000. The company can buy this part from an external supplier for $5 per unit and avoid 10% of the fixed costs. If Value Electronics decides to outsource the production of the part, how will it impact its operating income? A. Operating income increases by $97,000. B. Operating income decreases by $100,000. C. Operating income decreases by $97,000. D. Operating income increases by $100,000.
Burns Industries currently manufactures and sells 30,000 power saws per month, although it has the capacity to produce 45,000 units per month. At the 30,000- unit-per-month level of production, the per-unit cost is $85, consisting of $50 in variable costs and $35 in fixed costs. Burns sells its saws to retail stores for $90 each. Allen Distributors has offered to purchase 6,000 saws per month at a reduced price. Burns can manufacture these additional units with no change in its present level of fixed manufacturing costs. Burns decides to accept the special order for 6,000 units from Allen at a unit sales price that will add $120,000 per month to its operating income. The unit price Burns is charging Allen is: Multiple Choice $85. $50 $90. $70.

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