Sweet Wave Bakery normally produces sourdough bread on a regular basis. It sells approximately 35,000 of this type of bread each year at $3.90 per loaf. The variable costs for each loaf of bread are $2.30. Sunshine bakery in Miami has not been able to produce enough sourdough bread loaves to meet customer demands. They would like to purchase 15,000 loaves for $2.60 per loaf. Sweet Wave's sourdough bread line is near full capacity. In order to accept the order from Sunshine, Sweet Wave would have to temporarily add a 3rd shift to their sourdough line. This would increase the variable manufacturing costs by $.30 per loaf but variable selling costs would decrease by.20 per loaf. A restaurant has requested to purchase a special order of the sourdough bread. They are requesting 2,000 loaves. Sweet Wave has the capacity for this order without adding the additional shift. The restaurant is willing to pay $3.10 per loaf of bread. Instructions A. Given the information above: What are the consequences of Sweet Wave agreeing to provide the 15,000 units to Sunshine Bakery? Would this be a wise "special order" to accept? For negative answers, include "-" before the response. Revenue Cost Net Income Reject Order $0 $0 $0 Accept Order $ $ $ Should Sweet Wave accept the special order? Net Income Increase/Decrease +
Sweet Wave Bakery normally produces sourdough bread on a regular basis. It sells approximately 35,000 of this type of bread each year at $3.90 per loaf. The variable costs for each loaf of bread are $2.30. Sunshine bakery in Miami has not been able to produce enough sourdough bread loaves to meet customer demands. They would like to purchase 15,000 loaves for $2.60 per loaf. Sweet Wave's sourdough bread line is near full capacity. In order to accept the order from Sunshine, Sweet Wave would have to temporarily add a 3rd shift to their sourdough line. This would increase the variable manufacturing costs by $.30 per loaf but variable selling costs would decrease by.20 per loaf. A restaurant has requested to purchase a special order of the sourdough bread. They are requesting 2,000 loaves. Sweet Wave has the capacity for this order without adding the additional shift. The restaurant is willing to pay $3.10 per loaf of bread. Instructions A. Given the information above: What are the consequences of Sweet Wave agreeing to provide the 15,000 units to Sunshine Bakery? Would this be a wise "special order" to accept? For negative answers, include "-" before the response. Revenue Cost Net Income Reject Order $0 $0 $0 Accept Order $ $ $ Should Sweet Wave accept the special order? Net Income Increase/Decrease +
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Sweet Wave Bakery normally produces sourdough bread on a regular basis. It sells approximately 35,000 of this type of bread each year at $3.90 per
loaf. The variable costs for each loaf of bread are $2.30. Sunshine bakery in Miami has not been able to produce enough sourdough bread loaves to
meet customer demands. They would like to purchase 15,000 loaves for $2.60 per loaf. Sweet Wave's sourdough bread line is near full capacity. In
order to accept the order from Sunshine, Sweet Wave would have to temporarily add a 3rd shift to their sourdough line. This would increase the
variable manufacturing costs by $.30 per loaf but variable selling costs would decrease by .20 per loaf.
A restaurant has requested to purchase a special order of the sourdough bread. They are requesting 2,000 loaves. Sweet Wave has the capacity for
this order without adding the additional shift. The restaurant is willing to pay $3.10 per loaf of bread.
Instructions
A. Given the information above:
What are the consequences of Sweet Wave agreeing to provide the 15,000 units to Sunshine Bakery? Would this be a wise "special order" to accept?
For negative answers, include "-" before the response.
Revenue
Cost
Net Income
Reject
Order
$0
$0
$0
Accept Order
$
$
Should Sweet Wave accept the special
order?
Net Income
Increase/Decrease
$
+
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