The Young Company has gathered the following information for a unit of its most popular product: Direct materials 15 Direct labor 7 Overhead (40% variable) 10 Cost to manufacture 32 Desired markup (50%) 16 Target selling price 48 The above cost information is based on 10,300 units. A distributor has offered to buy 2,200 units at a price of $35 per unit. The distributor claims this special order would not disturb regular sales at $48. Special packaging and other selling expenses would be an additional $0.60 per unit for the special order. How many units of regular sales could be lost before this contract is not profitable? A. O units. B. 840 units. C. 1,100 units. D. 2,200 units. %24 %24

The Young Company has gathered the following information for a unit of its most popular product: Direct materials 15 Direct labor 7 Overhead (40% variable) 10 Cost to manufacture 32 Desired markup (50%) 16 Target selling price 48 The above cost information is based on 10,300 units. A distributor has offered to buy 2,200 units at a price of $35 per unit. The distributor claims this special order would not disturb regular sales at $48. Special packaging and other selling expenses would be an additional $0.60 per unit for the special order. How many units of regular sales could be lost before this contract is not profitable? A. O units. B. 840 units. C. 1,100 units. D. 2,200 units. %24 %24

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Need help with homework.
Coodie Manulacturers Inc. is approached by a potential customer to fulfill a one - time - only special order for a product similar to one offered to domestic customers. The company has excess capacity. The following per unit data apply for sales to regular customers Variable costs Direct materials $140 80 Direct labor Manufacturing support 155 Marketing costs 45 Fixed costs Manufacturing support 175 Markeling costs 55 Total costs 650 Markup (45%) 293 Targeted selling price $943 For Crandie Manufacturers Inc., what is the minimum acceptable price of this special order? (Assume marketing costs will be incurred for the special order.) OA $293 OB. $420 OC S450 OD. S650 O Time Remaining: 02:33:40 Next ) 2. 3. 4. 5. 6. 7 8. 9. delete W E R. Y
Costs are $28 per unit, which consists of $8 direct materials per unit, $10 direct labor per unit, $4 variable overhead per unit, and $6 fixed overhead per unit. Regular selling price is $40 per unit. Sales are low because of a recession. A large retail chain offered to buy 1,000 units from you at a discounted price of $28. Assume that you have enough spare capacity to fulfill this order. If you accept the special order in the short term, profit will O increase by $6,000 decrease by $12,000 decrease by $6,000 remain the same increase by $12,000
The Rosa model of Mohave Corporation is currently manufactured as a very plain umbrella with no decoration. The company is considering changing this product to a much more decorative model by adding a silk-screened design and embellishments. A summary of the expected costs and revenues for Mohave's two options follows: Estimated demand Estimated sales price Estimated manufacturing cost per unit Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit manufacturing cost Additional development cost Rosa Umbrella 29,000 units $31.00 $ 21.50 4.50 3.50 6.00 $ 35.50 Decorated Umbrella 29,000 units $ 41.00 $ 23.50 7.00 5.50 6.00 $ 42.00 $ 12,000 Required: 1. Determine the increase or decrease in profit if Mohave sells the Rosa Umbrella with the additional decorations. 2. Should Mohave add decorations to the Rosa umbrella? 3-a.Suppose the higher price of the decorated umbrella is expected to reduce estimated demand for this product to 27,000 units.…
Rey
Parker Pottery produces a line of vases and a line of ceramic figurines. Each line uses the same equipment and labor; hence, there are no traceable fixed costs. Common fixed cost equals $38, 400. Parker's accountant has begun to assess the profitability of the two lines and has gathered the following data for last year: Vases Figurines Price $40 $70 Variable cost 30 42 Contribution margin $10 $28 Number of units 1,000 500 Required: If required, round your final answers to nearest whole value. 1. Compute the number of vases and the number of figurines that must be sold for the company to break even. Break - even vases fill in the blank 1 units Break - even figurines fill in the blank 2 units 2. Parker Pottery is considering upgrading its factory to improve the quality of its products. The upgrade will add $5, 280 per year to total fixed cost. If the upgrade is successful, the projected sales of vases will be 2,000, and figurine sales will increase to 1,000 units. What is the new break -…
Vandenberg, Inc., produces and sells two products: a ceiling fan and a table fan. Vandenbergplans to sell 30,000 ceiling fans and 70,000 table fans in the coming year. Product price and costinformation includes: Ceiling Fan Table FanPrice $60 $15Unit variable cost $12 $7Direct fixed cost $23,600 $45,000Common fixed selling and administrative expenses total $85,000.Required:1. What is the sales mix estimated for next year (calculated to the lowest whole number foreach product)?2. Using the sales mix from Requirement 1, form a package of ceiling fans and table fans.How many ceiling fans and table fans are sold at break-even?3. Prepare a contribution-margin-based income statement for Vandenberg, Inc., based on theunit sales calculated in Requirement 2.4. What if Vandenberg, Inc., wanted to earn operating income equal to $14,400? Calculate thenumber of ceiling fans and table…
Dewey Manufacturing has been approached by a new customer with an offer to purchase 500 units of its hands-free automotive model SMAK at a price of $15,000 per unit. Existing sales would not be affected, and Dewey has sufficient capacity to produce the special order. Fixed overhead will not change if Dewey accepts the order or not. Unit cost data is: Per Unit: Direct Materials $6,000 Direct Labor $2,500 Variable OVHD $3,500 Fixed OVHD $10,000 $22,000 Normal sales price is $27,000. Assume Dewey decides to accept the order. How much will their operating income change? Should they have accepted the order
The Rosa model of Mohave Corporation is currently manufactured as a very plain umbrella with no decoration. The company is considering changing this product to a much more decorative model by adding a silk-screened design and embellishments. A summary of the expected costs and revenues for Mohave’s two options follows: Rosa Umbrella Decorated Umbrella Estimated demand 11,000 units 11,000 units Estimated sales price $ 9.00 $ 20.00 Estimated manufacturing cost per unit Direct materials $ 3.50 $ 5.50 Direct labor 1.50 4.00 Variable manufacturing overhead 0.50 2.50 Fixed manufacturing overhead 2.00 2.00 Unit manufacturing cost $ 7.50 $ 14.00 Additional development cost $ 11,000 Required: 1. Determine the increase or decrease in profit if Mohave sells the Rosa Umbrella with the additional decorations. 2. Should Mohave add decorations to the Rosa umbrella? 3-a.Suppose the higher price of the decorated umbrella is expected to…
Meman