Use the following information for the Quick Study below. (Algo)[The following information applies to the questions displayed below.]Helix Company is approached by a new customer to provide 1,800 units of its product at a special price of $9 per unit. Thenormal selling price of the product is $11 per unit. Helix is operating at 80% of its capacity of 11,500 units. No incrementalfixed overhead will be incurred because of this order. Also, there will be no incremental fixed general and administrativecosts because of this order.QS 23-2 (Algo) Special offer LO P7a. Special selling price of $9.00 per unitb. Direct materials of $2.00 per unitc. Direct labor of $3.00 per unitd. Variable overhead of $2.50 per unite. Fixed overhead of $.75 per unitf. Fixed general and administrative costs of $.60 per unitBased on income, should Helix accept this new customer order at the special price?SalesVariable costsSPECIAL OFFER ANALYSISDirect materialsDirect laborVariable overheadContribution marginFixed costsFixed overheadFixed general and administrative$4Per Unit11.00 $(2.00)(3.00)(2.50)3.50(0.75)(0.60)215Total101,200(18,400)(27,600)(23,000)32,200(6,900)(5,520)10 700

Special offer analysis Per unit Total Sales $9 $16,200 Variable costs Direct…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Jov Co sells three products: A, B and C. It can either make the products itself or purchase them from a subcontractor. The following information is available: Machine hours to manufacture Product A B C O 0 O 2,500 5 3 2 O 4,500 Variable cost ($) 30 20 15 For the coming period, Jov Co has received orders from its customers for 5,000 units of each product but it only has 20,000 machine hours available. What is the optimum number of units of product B which Jov Co should purchase from the subcontractor? O 5,000 Purchase cost from subcontractor ($) 40 35 20
I have no idea how to answer the two questions involved in this problem: The following total cost data are for 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 $1,720,000 Direct Labor 1,120,000 Variable overhead 560,000 Fixed overhead (Note 1) 880,000 Selling expenses (Note 2) 720,000 Administrative expense (fixed) 200,000 5,200,000 Notes: 1. Beyond normal capacity, fixed overhead cost increases $30,000 for each 20,000 units or fraction thereof until a max capacity of 640,000 units is reached. 2. Selling expenses are a 10% sales commission. Ralston pays only one-half of the regular sales commission rates on any sale of 20,000 or more units. Ralston's sales manager has received a special order for 48,000 units from a large discount chain a special price of $16 each, FOB…
Lakeside Incorporated produces a product that currently sells for $46.80 per unit. Current production costs per unit include direct materials, $13; direct labor, $15; varlable overhead, $6.50; and fixed overhead, $6.50. Product engineering has determined that a certain part of the product conversion process could be outsourced. Raw material costs would not be affected, but direct labor and variable overhead costs would be reduced by 30%. No other opportunity is currently feasible for unused production capacity. Required: a. What would be the net cost advantage or disadvantage if Lakeview decided to outsource part of the conversion process at a cost of $5.20 per unit? Note: Do not round your Intermediate calculations. Round your final answer to 2 decimal places. b. Should Lakeside outsource part of the conversion process at a cost of $5.20 per unit? a. b. Should Lakeside outsource conversion process at this cost?
Crane Industries incurs unit costs of $6 ($4 variable and $2 fixed) in making an assembly part for its finished product. A supplier offers to make 13,500 of the assembly part at $5 per unit. If the offer is accepted, Crane will save all variable costs but no fixed costs. Prepare an analysis showing the total cost saving, if any, that Crane will realize by buying the part. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Variable manufacturing costs Fixed manufacturing costs Purchase price Total annual cost The decision should be to $ Make the part $ Buy $ $ Net Income Increase (Decrease)
oncorde Ltd has been asked to quote a price for an order of 8 units of Product Delta. Making this product will require skilled labour, which is currently in hort supply and is paid £15 an hour. If the order is accepted, all necessary labour will have to be transferred from existing work. As a result, other orders will be lost. It is estimated that for each hour transferred to this contract £45 will be lost (calculated as lost sales revenue £75, less materials £15 and labour 15). The production manager believes that, owing to a learning process, the time taken to make each unit will reduce, from 20 hours to make the first one, by one hour a unit made. (That is 20 hours to make the first one, 19 hours to make the second, 18 hours to make the third one and so on.) What is the total relevant cost of skilled labour for the purposes of the order? The relevant cost for skilled labour will be will be £. ... Time Remaining: 00:43:50 Next
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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

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