Sunland Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on clothing while managing heat. Y-Go has become very popular in undergarments for sports activities. Operating at capacity, the company can produce 1,099,000 Y-Go undergarments a year. The per unit and the total costs for an individual garment when the company operates at full capacity are as follows. Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Totals Per Undergarment $2.10 0.42 0.98 1.40 0.37 $5,27 Total $2,307.900 461.580 1,077,020 1.538.600 406,630 $5,791,730 The U.S. Army has approached Sunland Fiber and expressed an interest in purchasing 250,200 Y-Go undergarments for soldiers in extremely warm climates. The Army would pay the unit cost for direct materials, direct labor, and variable manufacturing overhead costs. In addition, the Army has agreed to pay an additional $1.00 per undergarment to cover all other costs and provide a profit. Presently, Sunland Fiber is operating at 70% capacity and does not have any other potential buyers for Y-Go. If Sunland Fiber accepts the Army's offer, it will not incur any variable selling expenses related to this order. Prepare an incremental analysis for the Sunland Fiber. (Enter negative amounts using either o negative sign preceding the number eg.-45 or parentheses e.g. (45).)
Sunland Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on clothing while managing heat. Y-Go has become very popular in undergarments for sports activities. Operating at capacity, the company can produce 1,099,000 Y-Go undergarments a year. The per unit and the total costs for an individual garment when the company operates at full capacity are as follows. Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Totals Per Undergarment $2.10 0.42 0.98 1.40 0.37 $5,27 Total $2,307.900 461.580 1,077,020 1.538.600 406,630 $5,791,730 The U.S. Army has approached Sunland Fiber and expressed an interest in purchasing 250,200 Y-Go undergarments for soldiers in extremely warm climates. The Army would pay the unit cost for direct materials, direct labor, and variable manufacturing overhead costs. In addition, the Army has agreed to pay an additional $1.00 per undergarment to cover all other costs and provide a profit. Presently, Sunland Fiber is operating at 70% capacity and does not have any other potential buyers for Y-Go. If Sunland Fiber accepts the Army's offer, it will not incur any variable selling expenses related to this order. Prepare an incremental analysis for the Sunland Fiber. (Enter negative amounts using either o negative sign preceding the number eg.-45 or parentheses e.g. (45).)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints
Section: Chapter Questions
Problem 16E
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Transcribed Image Text:Sunland Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on
clothing while managing heat. Y-Go has become very popular in undergarments for sports activities. Operating at capacity, the
company can produce 1,099,000 Y-Go undergarments a year. The per unit and the total costs for an individual garment when
the company operates at full capacity are as follows.
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Variable selling expenses
Totals
Per Undergarment
$2.10
0.42
0.98
1.40
0.37
$5.27
Total
$2,307.900
461.580
1,077,020
1,538,600
406,630
$5,791,730
The U.S. Army has approached Sunland Fiber and expressed an interest in purchasing 250,200 Y-Go undergarments for
soldiers in extremely warm climates. The Army would pay the unit cost for direct materials, direct labor, and variable
manufacturing overhead costs. In addition, the Army has agreed to pay an additional $1.00 per undergarment to cover all other
costs and provide a profit. Presently, Sunland Fiber is operating at 70% capacity and does not have any other potential buyers
for Y-Go. If Sunland Fiber accepts the Army's offer, it will not incur any variable selling expenses related to this order.
Prepare an incremental analysis for the Sunland Fiber. (Enter negative am unts using either a negative sign preceding the number
eg.-45 or parentheses e.g. (45).)
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