**Stryker Industries Case Study**Stryker Industries received an offer from an exporter for 26,000 units of product at $17 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available:- **Domestic unit sales price:** $23- **Unit manufacturing costs:** - **Variable:** $11 - **Fixed:** $5**The amount of profit or loss from acceptance of the offer is:**- a. $156,000- b. $286,000- c. $598,000- d. $442,000**Analysis:**To determine the profit or loss, consider the offer price and the unit manufacturing costs. The key is to compare the revenue from the offer against the variable and fixed costs per unit to calculate the total profit or loss from the additional units sold under this specific export offer. Since fixed costs remain constant, we focus on the variable costs. Calculate the profit per unit as follows:1. Export offer price per unit: $172. Variable cost per unit: $113. Contribution margin per unit: $17 - $11 = $6Calculate total contribution for 26,000 units:4. Total contribution: 26,000 units * $6/unit = $156,000Hence, the correct profit from the acceptance of the offer is option **a. $156,000**.

The export order is a special order and hence this will not affect the normal domestic sales. Hence we will use relevant costs or differential costs only in this case. Relevant costs or differential costs are those costs that change with the decision. Here the decision to take on the export order will lead to change in the total variable costs and as normal production is not affected the fixes costs will have no impact. Hence we will not consider the fixed costs per unit of $5 in this case. Profit amount = no. of units of export order*(selling price per unit - variable cost per unit) = 26,000 units * ($17 per unit - $11 per unit)= 26,000 units * $6 per unit= $156,000 Thus the answer is option "a" $156,000

Business

Accounting

Stryker Industries received an offer from an exporter for 26,000 units of product at $17 per unit. The acceptance the offer will not affect normal production or domestic sales prices. The following data are available: $23 Domestic unit sales price Unit manufacturing costs: Variable Fixed 11 5 The amount of profit or loss from acceptance of the offer is a

Stryker Industries received an offer from an exporter for 26,000 units of product at $17 per unit. The acceptance the offer will not affect normal production or domestic sales prices. The following data are available: $23 Domestic unit sales price Unit manufacturing costs: Variable Fixed 11 5 The amount of profit or loss from acceptance of the offer is a

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Cantor Products sells a product for $81 Varlable costs per unit are $44, and monthly fxed costs are $140.600 21 a. What is the break-even point in units? unids A What unit sales would be required to eam a target profit of $310,800? ratal Resied Sales units FAssume they achieve the level of sales required in part b, what is the degree of operating leverage? (Round your answer to 3 declmal places.) Ceye of Operating Leverae
Jacoby Company received an offer from an exporter for 20,500 units of product at $19 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price $24 Unit manufacturing costs: Variable $9 Fixed $5 What is the differential revenue from the acceptance of the offer? a.$389,500 b.$881,500 c.$102,500 d.$492,000
Stryker Industries received an offer from an exporter for 24,000 units of product at $18 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data is available: Domestic unit sales price $21 Unit manufacturing costs: Variable 11 Fixed 6 What is the amount of income or loss from acceptance of the offer? a.$168,000 b.$264,000 c.$504,000 d.$432,000
Stryker Industries received an offer from an exporter for 21,000 units of product at $19 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price $23 Unit manufacturing costs: Variable Fixed 9 4 The amount of profit or loss from acceptance of the offer is a a. $483,000 Ob. $189,000 ○ c. $399,000 Od. $210,000
Jacoby Company received an offer from an exporter for 29,500 units of product at $18 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Line Item Description Amount Domestic unit sales price $25 Unit manufacturing costs: Variable 9 Fixed 4 The differential revenue from the acceptance of the offer is a. $1,268,500 b. $206,500 c. $737,500 d. $531,000
Jacoby Company received an offer from an exporter for 26,200 units of product at $19 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price $24 Unit manufacturing costs: Variable Fixed 10 d. $131,000 3 The differential revenue from the acceptance of the offer is O a. $628,800 O b. $497,800 Oc. $1,126,600 O
Stryker Industries received an offer from an exporter for 26,000 units of product at $16 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price $22 Unit manufacturing costs: Variable Fixed 13 6 The amount of profit or loss from acceptance of the offer is a Oa. $78,000 Ob. $338,000 Oc. $416,000 Od. $572,000
Stryker Industries received an offer from an exporter for 21,000 units of product at $17 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price $21 Unit manufacturing costs: Variable Fixed 9 4 The differential cost from the acceptance of the offer is O a. $189,000 O b. $441,000 O c. $84,000 O d. $357,000
Please do not give image format