The following total cost data are for the Ralston manufacturing company which has a normal capacity per period of 400,000 units of product that sell for $18 each. For the foreseeable future, regular sales volume should continue at normal capacity of production
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Business Decision Case.
The following total cost data are for the Ralston manufacturing company which has a normal capacity per period of 400,000 units of product that sell for $18 each. For the foreseeable future, regular sales volume should continue at normal capacity of production.
Direct Materials $1,720,00
Direct Labor $ 1,120,000
Variable
Fixed Overheard (N1) 880,000
Selling Expense (N2) 720,000
Adminstrative Exp. Fixed 200,000
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$5,200,000
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Notes
1. Beyond nomral capacity, fixed overhead cost increase $30,,000 for each 20,000 units or fraction thereof until a maximum of 640,000 units is reached
2. Selling expense are at 10% sale commission. Ralston pays only one half o the regualr sales commission rates on any sale of 20,000 or more units.
Ralstal sales manager has recived a specail order for 48,000 units from a large discount chain at a special price of $16 each, F.O.B factory. the controllers office has furnished the following additional cost data related to the special order:
REQUIRED:
A. Presenta a analysiss suppproting a decision to accept or reject the special order. Assume Ralstons regualr sales are not affected by the special order.
B. What is the lowest unit sale price Ralston could recieve and still make a before-tax profit of $39,600 on the speical order?
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