Variable overhead:7 fixed: overhead:8 Sycamore Shops has a capacity of 55,000 units and is currently producing and selling 50,000at $55 a unit. The present cost structure, on a per-unit basis, is:Direct materialDirect labor$2012Variable overhead 7Fixed overhead8An order for 12,000 units has been received from a Japanese company at a price of $50 perunit. The order size cannot be reduced. If the order is accepted, the profit will:A. Decrease by $35,000B. Increase by $20,000C. Increase by $63,000D. Increase by $35,000

Detailed explanation:Capacity: 55,000 unitsCurrent Production and Existing Sales : 50,000…

Answered: Sycamore Shops has a capacity of 55,000…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 6PA: Gent Designs requires three units of part A for every unit of Al that it produces. Currently, part A...

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Remarkable Enterprises requires four units of part A for every unit of Al that it produces. Currently, part A is made by Remarkable, with these per-unit costs in a month when 4,000 units were produced: Variable manufacturing overhead is applied at $1.60 per unit. The other $0.50 of overhead consists of allocated fixed costs. Remarkable will need 8,000 units of part A for the next years production. Altoona Corporation has offered to supply 8,000 units of part A at a price of $8.00 per unit. If Remarkable accepts the offer, all of the variable costs and $2,000 of the fixed costs will be avoided. Should Remarkable accept the offer from Altoona Corporation?
Hatch Manufacturing produces multiple machine parts. The theoretical cycle time for one of its products is 65 minutes per unit. The budgeted conversion costs for the manufacturing cell dedicated to the product are 12,960,000 per year. The total labor minutes available are 1,440,000. During the year, the cell was able to produce 0.6 units of the product per hour. Suppose also that production incentives exist to minimize unit product costs. Required: 1. Compute the theoretical conversion cost per unit. 2. Compute the applied conversion cost per minute (the amount of conversion cost actually assigned to the product). 3. Discuss how this approach to assigning conversion cost can improve delivery time performance. Explain how conversion cost acts as a performance driver for on-time deliveries.
Patz Company produces two types of machine parts: Part A and Part B, with unit contribution margins of 300 and 600, respectively. Assume initially that Patz can sell all that is produced of either component. Part A requires two hours of assembly, and B requires five hours of assembly. The firm has 300 assembly hours per week. Required: 1. Express the objective of maximizing the total contribution margin subject to the assembly-hour constraint. 2. Identify the optimal amount that should be produced of each machine part and the total contribution margin associated with this mix. 3. What if market conditions are such that Patz can sell at most 75 units of Part A and 60 units of Part B? Express the objective function with its associated constraints for this case and identify the optimal mix and its associated total contribution margin.
Bobcat uses a traditional cost system and estimates next years overhead will be $800.000, as driven by the estimated 25,000 direct labor hours. It manufactures three products and estimates the following costs: If the labor rate is $30 per hour, what is the per-unit cost of each product?
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What are the fixed overhead costs of making the component?
Marks Co. has a capacity of 100,000 units. They are currently producing and selling 90,000 units at $50 per unit. The cost of a unit at the present production level is as follows: Direct materials Direct labor Variable overhead Fixed overhead Per unit $19 11 6 9 $45 An order for 10,000 units has just been received from a foreign company at a price of $42 per unit. Freight costs of $2 per unit would be required. (A) Should Marks accept the order? Why or why not? (B) Assume the order was for 12,000 units. Should Marks accept the order? Why or why not?
You make component X in-house at a cost of $16 per unit, which consists of $2 direct labor per unit, $7 direct materials per unit, $6 fixed overhead per unit, and $1 variable overhead per unit. You need 1,000 units of X per month. An outside supplier has offered to sell component X to you at $12 per unit. If you outsource the production of X to the supplier, how much will your profit change in the short term? decrease by $4,000 decrease by $2,000 O increase by $2,000 O increase by $12,000 O increase by $4,000
Jade Ltd. manufactures a product, which regularly sells for $67.75. This product has the following costs per unit at the expected production of 47,500 units: Cost Amount Direct labour $20.00 Direct materials 10.50 Manufacturing overhead (36% is variable) 24.00 The company has the capacity to produce 52,250 units. A wholesaler has offered to pay $77 for 12,000 units. If Jade Ltd. accepts this special order, operating income would increase (decrease) by how much?
Wallyworld Company manufactures a product with the following costs per unit at the expected production level of 84,000 units: Direct materials $12 Direct labor 36 Variable manufacturing overhead 18 Fixed manufacturing overhead 24 The company has the capacity to produce 90,000 units. The product regularly sells for $120. A wholesaler has offered to pay $110 a unit for 7,500 units.If the special order is accepted, the effect on operating income would be a Group of answer choices $495,000 increase. $75,000 decrease. $249,000 increase. $429,000 increase.
Lopez Corporation sells a product for $18 per unit, and the standard cost card for the product shows the following costs Direct material $1 Direct labor 2 Overhead (80% fixed) 7 Total $10 Refer to Lopez Corporation. Assume that Lopez has sufficient idle capacity to produce the 1,000 units. If Lopez wants to increase its operating profit by $5,600, what would it charge as a per-unit selling price? Select one: a. $18.00 b. $16.60 c. $10.00 d. $11.00
Net income from accepting the offer would be

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