The LPR Manufacturing has gathered the following information for a unit of its standard product: Direct materials: $12.50 Direct labor: $7.80 Overhead (30% variable): $9.00 Cost of manufacture: $29.30 Desired markup (40%): $11.72 Target selling price: $41.02 The above cost information is based on 6,000 units. A corporate customer has offered to buy 1,500 units at a price of $32.00 per unit. This special order would not affect regular sales. Variable shipping and other selling expenses would be an additional $3.50 per unit for the special order. If the special order is accepted, LPR's operating profits will increase by: A. $9,750 B. $3,450 C. $8,250 D. $12,000

The LPR Manufacturing has gathered the following information for a unit of its standard product: Direct materials: $12.50 Direct labor: $7.80 Overhead (30% variable): $9.00 Cost of manufacture: $29.30 Desired markup (40%): $11.72 Target selling price: $41.02 The above cost information is based on 6,000 units. A corporate customer has offered to buy 1,500 units at a price of $32.00 per unit. This special order would not affect regular sales. Variable shipping and other selling expenses would be an additional $3.50 per unit for the special order. If the special order is accepted, LPR's operating profits will increase by: A. $9,750 B. $3,450 C. $8,250 D. $12,000

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 1PA: The following product Costs are available for Haworth Company on the production of chairs: direct...

See similar textbooks

Similar questions

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?
Colonels uses a traditional cost system and estimates next years overhead will be $480,000, with the estimated cost driver of 240,000 direct labor hours. It manufactures three products and estimates these costs: If the labor rate is $25 per hour, what is the per-unit cost of each product?
Gent Designs requires three units of part A for every unit of Al that it produces. Currently, part A is made by Gent, with these per-unit costs in a month when 4.000 units were produced: Variable manufacturing overhead is applied at $1.00 per unit. The other $0.30 of overhead consists of allocated fixed costs. Gent will need 6,000 units of part A for the next years production. Cory Corporation has offered to supply 6,000 units of part A at a price of $7.00 per unit. It Gent accepts the offer, all of the variable costs and $1,200 of the fixed costs will be avoided. Should Gent Designs accept the offer from Cory Corporation?
Box Springs, Inc., makes two sizes of box springs: twin and double. The direct material for the twin is $25 per unit and $40 s used in direct labor, while the direct material for the double is $40 per unit, and the labor cost is $50 per unit. Box Springs estimates it will make 5,000 twins and 9,000 doubles in the next year. It estimates the overhead for each cost pool and cost driver activities as follows: How much does each unit cost to manufacture?
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?
Rose Company has a relevant range of production between 10,000 and 25.000 units. The following cost data represents average cost per unit for 15,000 units of production. Using the cost data from Rose Company, answer the following questions: If 10,000 units are produced, what is the variable cost per unit? If 18,000 units are produced, what is the variable cost per unit? If 21,000 units are produced, what are the total variable costs? If 11,000 units are produced, what are the total variable costs? If 19,000 units are produced, what are the total manufacturing overhead costs incurred? If 23,000 units are produced, what are the total manufacturing overhead costs incurred? If 19,000 units are produced, what are the per unit manufacturing overhead costs incurred? If 25,000 units are produced, what are the per unit manufacturing overhead costs incurred?
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.
The following product costs are available for Stellis Company on the production of erasers: direct materials, $22,000; direct labor, $35,000; manufacturing overhead, $17,500; selling expenses, $17,600; and administrative expenses; $13,400. What are the prime costs? What are the conversion costs? What is the total product cost? What is the total period cost? If 13,750 equivalent units are produced, what is the equivalent material cost per unit? If 17,500 equivalent units are produced, what is the equivalent conversion cost per unit?
A customer has asked Lalka Corporation to supply 4,500 units of product H60, with some modifications, for $42.70 each. The normal selling price of this product is $49.35 each. The normal unit product cost of product H60 is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $ 16.20 2.80 10.00 9,40 $ 38.40 Direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like some modifications made to product H60 that would increase the variable costs by $5.30 per unit and that would require a one-time investment of $24,750 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. Required: Determine the financial advantage or disadvantage of accepting the special order.
Summit Electronics produces and sells 3,500 units of a product. The following cost data is available: Sales Price: $600.00 per unit Fixed Costs: • Marketing and administrative: $250,000 per period Manufacturing overhead: $150,000 per period Variable Costs (per unit): Marketing and administrative: $40.00 Manufacturing overhead: $55.00 • • Direct labor: $75.00 . Direct material: $140.00 What is the full cost per unit of making and selling the product?
Emerald Pools, Inc. has provided the following information for the year. Units produced 14,000 units Sales price $700 per unit Direct materials $25 per unit Direct labor $45 per unit Variable manufacturing overhead $50 per unit Fixed manufacturing overhead $470,000 per year Variable selling and administration costs $90 per unit Fixed selling and administration costs $260,000 per year What is the unit product cost using absorption costing? (Round any intermediate calculations and your final answer to the nearest dollar.)
Lazer Tag manufactures computer parts within a relevant range of 50,000 to 100,000 units per year. Complete the following manufacturing cost schedule (a through j) for Lazer Tag. Fill in the following chart. Parts Produced TOTAL COSTS: 50,000 100,000 Variable $75,000 Fixed 50,000 Total COSTS PER UNIT: Variable Fixed Total