Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Question
Chapter 13, Problem 9E
a.
To determine
The contribution margin per unit.
To determine
Whether Company H should accept or reject the special order.
b.
To determine
The contribution margin income statement for the special order.
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Exercise 13-9A (Static) Using the contribution margin approach
for a special order decision LO 13-2
Hensely Company, which produces and sells a small digital clock, bases its pricing
strategy on a 25 percent markup on total cost. Based on annual production costs
for 25,000 units of product, computations for the sales price per clock follow.
Unit-level costs
Fixed costs
Total cost (a)
Markup (a x 0.25)
Total sales (b)
Sales price per unit (b÷ 25,000)
Required
$240,000
60,000
300,000
75,000
$375,000
$15
a. Hensely has excess capacity and receives a special order for 8,000 clocks for
$12 each. Calculate the contribution margin per unit. Based on this, should
Hensely accept the special order?
b. Prepare a contribution margin income statement for the special order.
Complete this question by entering your answers in the tabs below.
Required A Required B
Hensely has excess capacity and receives a special order for 8,000 clocks for $12 each
unit. Based on this, should Hensely accept the…
Exercise 6-7B.
+Exercise 6-9B Using the contribution margin approach for a special order decision
Benton Company produces and sells a food processor that it prices at a 32 percent markup on total
cost. Based on data pertaining to producing and selling 50,000 food processors, Benton computes the
sales price per food processor as follows.
Unit-level costs
$ 750,000
Fixed costs
500,000
$1,250,000
Total cost (a)
Markup (a x 0.32)
400,000
Total sales revenue (b)
$1,650,000
Sales price per unit (b 50,000)
2$
33.00
Required
Benton receives a special order for 7,000 food processors for $20 each. Benton has excess capacity.
Calculate the contribution margin per unit for the special order. Based on the contribution margin
per unit, should Benton accept the special order?
a.
b. Support your answer by preparing a contribution margin income statement for the special order.
Exercise 6-10B Making an outsourcing decision
Swartz Boats Company currently produces a battery used in manufacturing its…
Question 8
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Morales Corporation produces microwave ovens. The following per
unit cost information is available: direct materials $34, direct labor
$29, variable manufacturing overhead $15, fixed manufacturing
overhead $42, variable selling and administrative expenses $17,
and fixed selling and administrative expenses $26. Its desired ROI
per unit is $29. Compute the markup percentage using absorption-
cost pricing. (Round answer to 2 decimal places, eg
al
10.50%.)
Markup percentage
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Chapter 13 Solutions
Survey Of Accounting
Ch. 13 - Prob. 1QCh. 13 - Prob. 2QCh. 13 - Prob. 3QCh. 13 - Prob. 4QCh. 13 - Prob. 5QCh. 13 - Prob. 6QCh. 13 - Prob. 7QCh. 13 - Prob. 8QCh. 13 - Prob. 9QCh. 13 - Prob. 10Q
Ch. 13 - Prob. 11QCh. 13 - Prob. 12QCh. 13 - Prob. 13QCh. 13 - Prob. 14QCh. 13 - Prob. 15QCh. 13 - Prob. 16QCh. 13 - Prob. 17QCh. 13 - Prob. 18QCh. 13 - Prob. 19QCh. 13 - Prob. 1ECh. 13 - Prob. 2ECh. 13 - Prob. 3ECh. 13 - Prob. 4ECh. 13 - Exercise 6-5AOpportunity costs Norman Dowd owns...Ch. 13 - Prob. 6ECh. 13 - Prob. 7ECh. 13 - Prob. 8ECh. 13 - Prob. 9ECh. 13 - Prob. 10ECh. 13 - Exercise 6-11AEstablishing price for an...Ch. 13 - Exercise 6-12AOutsourcing decision with...Ch. 13 - Exercise 6-13AOutsourcing decision affected by...Ch. 13 - Prob. 14ECh. 13 - Exercise 6-15ASegment elimination decision Dudley...Ch. 13 - Prob. 16ECh. 13 - Exercise 6-17AAsset replacementopportunity cost...Ch. 13 - Prob. 18ECh. 13 - Exercise 6-19A Asset replacement decision Mead...Ch. 13 - Exercise 6-20A Asset replacement decision Kahn...Ch. 13 - Exercise 6-21A Annual versus cumulative data for...Ch. 13 - Problem 6-23A Context-sensitive relevance Required...Ch. 13 - Problem 6-24A Context-sensitive relevance...Ch. 13 - Problem 6-25A Effect of order quantity on special...Ch. 13 - Problem 6-26A Effects of the level of production...Ch. 13 - Problem 6-28A Eliminating a segment Western Boot...Ch. 13 - Effect of activity level and opportunity cost on...Ch. 13 - Problem 6-30A Comprehensive problem including...Ch. 13 - Prob. 29PCh. 13 - ATC 6-1 Business Application Case Analyzing...Ch. 13 - ATC 6-2 Group Assignment Relevance and cost...Ch. 13 - Prob. 3ATCCh. 13 - Prob. 4ATCCh. 13 - Prob. 5ATC
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Similar questions
- Exercise I-Set B Palawan Company must determine a target selling price for one of its products. Cost data relating to the product are as follows: Per Unit P 30 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable administrative and selling expenses 15 5 Fixed administrative and expenses 40 The costs above are based on an anticipated volume of 70,000 units produced and sold each period. The company uses cost-plus pricing, and it has a policy of obtaining target selling prices by adding a markup of 50% of unit manufacturing cost or by adding a markup of 80% of variable costs. Required: 1. Compute the target selling price per unit using absorption costing. 2. Compute the target selling price per unit using contribution costing.arrow_forwardEXERCISE A-2 Absorption Costing Approach to Setting a Selling Price LOZ) Martin Company is considering the introduction of a new product. To determine a selling price, the company has gathered the following information: Number of units to be produced and sold each year. Unit product cost.... Projected annual selling and administrative expenses Estimated investment required by the company Desired return on investment (ROI) 14,000 $25 $50,000 $750,000 12% Required: The company uses the absorption costing approach to cost-plus pricing. 1. Compute the markup required to achieve the desired ROI. 2. Compute the selling price per unit.arrow_forwardQUESTION 9 QRC Company is trying to decide which one of two alternatives it will accept. The costs and revenues associated with each alternative are listed below: Alternative A Alternative B Projected revenue $ 62,500 $ 75,000 Unit-level costs 12,500 18,000 Batch-level costs 6,250 12,000 Product-level costs 7,500 8,500 Facility-level costs 5,000 6,250 What is the differential revenue for this decision? $62,500 $25,000 $75,000 $12,500arrow_forward
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