Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)
6th Edition
ISBN: 9780134486857
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Question
Chapter 25, Problem 11E
1.
To determine
State the factors that must be considered by managers of Company N while deciding about the special order.
2.
To determine
Explain whether the analysis of Person K is correct.
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1. The Fluffy Company manufactures slippers and sells them at $12 a pair. Variable manufacturing cost is 6.50 a pair, and allocated fixed manufacturing cost is $2.75 a pair. It has enough idle capacity available to accept a one-time-only special order of 35,000 pairs of slippers at 9.25 a pair.
Fluffy will not incur any marketing costs as a result of the special order. What would the effect on operating income be if the special order could be accepted without affecting normal sales: (a) $0, (b) $96,250 increase, (c) $227,500 increase, or (d) $323,750 increase? 2. The Company manufactures Part No. 498 for use in its production line. The manufacturing cost per unit for units of Part No. 498 is as follows:
The Cozy Company manufactures slippers and sells them at $10 a pair. Variable manufacturing cost is $5.75 a pair, and allocated fixed manufacturing cost is $1.75 a pair. It has enough idle capacity available to accept a one-time-only special order of 25,000 pairs of slippers at $7.50 a pair. Cozy will not incur any marketing costs as a result of the special order. What would the effect on operating income be if the special order could be accepted without affecting normal sales:
(a) $0,
(b) $43,750 increase
(c) $143,750 increase, or
(d) $187,500 increase?
Show your calculations.
Sundial Company manufactures and sells watches for $44 each. Tick−Tock Company has offered Sundial $25 per watch for a one−time order of 5,700 watches. The total manufacturing cost per watch is $29 per unit and consists of variable costs of $21 per watch and fixed overhead costs of $8 per watch. Assume that Sundial has excess capacity and that the special pricing order would not adversely affect regular sales. What is the change in operating income that would result from accepting the special sales order?
A.
decrease of $22,800
B.
increase of $22,800
C.
increase of $142,500
D.
decrease of $142,500
Chapter 25 Solutions
Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)
Ch. 25 - Doherty Company is considering replacing the...Ch. 25 - Prob. 2TICh. 25 - Prob. 3TICh. 25 - Prob. 4TICh. 25 - Prob. 5TICh. 25 - Prob. 6TICh. 25 - Thomas Company makes a product that regularly...Ch. 25 - Prob. 8TICh. 25 - McCollum Company manufactures two products. Both...Ch. 25 - Prob. 10TI
Ch. 25 - Grimm Company makes decorative wedding cakes. The...Ch. 25 - Prob. 12TICh. 25 - Prob. 1QCCh. 25 - Prob. 2QCCh. 25 - Which of the following costs are irrelevant to...Ch. 25 - When making decisions, managers should consider a....Ch. 25 - When pricing a product or service, managers must...Ch. 25 - When companies are price-setters, their products...Ch. 25 - Prob. 7QCCh. 25 - In deciding which product lines to emphasize when...Ch. 25 - When making outsourcing decisions, which of the...Ch. 25 - When deciding whether to sell as is or process a...Ch. 25 - List the four steps in short-term decision making....Ch. 25 - Prob. 2RQCh. 25 - What makes information irrelevant to decision...Ch. 25 - What are sunk costs? Give an example.Ch. 25 - Prob. 5RQCh. 25 - Prob. 6RQCh. 25 - What are the two keys in short-term decision...Ch. 25 - What questions should managers answer when setting...Ch. 25 - Prob. 9RQCh. 25 - What is target pricing? Who uses it?Ch. 25 - What does the target full product cost include?Ch. 25 - What is cost-plus pricing? Who uses it?Ch. 25 - What questions should managers answer when...Ch. 25 - When completing a differential analysis, when are...Ch. 25 - Prob. 15RQCh. 25 - What questions should managers answer when...Ch. 25 - Prob. 17RQCh. 25 - What is a constraint?Ch. 25 - Prob. 19RQCh. 25 - What is the decision rule concerning products to...Ch. 25 - Prob. 21RQCh. 25 - Prob. 22RQCh. 25 - What questions should managers answer when...Ch. 25 - What questions should managers answer when...Ch. 25 - Prob. 25RQCh. 25 - Prob. 26RQCh. 25 - You are trying to decide whether to trade in your...Ch. 25 - Skiable Acres operates a Rocky Mountain ski...Ch. 25 - Refer to details about Skiable Acres from Short...Ch. 25 - Prob. 4SECh. 25 - StoreAll produces plastic storage bins for...Ch. 25 - Suppose Roasted Pepper restaurant is considering...Ch. 25 - Priscilla Smiley manages a fleet of 250 delivery...Ch. 25 - Heavenly Dessert processes cocoa beans into cocoa...Ch. 25 - Dan Jacobs, production manager for GreenLife,...Ch. 25 - Suppose the Baseball Hall of Fame in Cooperstown,...Ch. 25 - Prob. 11ECh. 25 - Prob. 12ECh. 25 - Top managers of Video Avenue are alarmed by their...Ch. 25 - Refer to Exercise E25-13. Assume that Video Avenue...Ch. 25 - Prob. 15ECh. 25 - Moore Company sells both designer and moderately...Ch. 25 - Prob. 17ECh. 25 - Cool Systems manufactures an optical switch that...Ch. 25 - Refer to Exercise E25-18. Cool Systems needs...Ch. 25 - NaturalMaid processes organic milk into plain...Ch. 25 - Sea Blue manufactures flotation vests in...Ch. 25 - Prob. 22APCh. 25 - Members of the board of directors of Security...Ch. 25 - Brinn, located in Port St. Lucie, Florida,...Ch. 25 - Snow Ride manufactures snowboards. Its cost of...Ch. 25 - Prob. 26APCh. 25 - Prob. 27BPCh. 25 - Green Thumb operates a commercial plant nursery,...Ch. 25 - Members of the board of directors of Security Team...Ch. 25 - Prob. 30BPCh. 25 - Prob. 31BPCh. 25 - Elm Petroleum has spent 204,000 to refine 61,000...Ch. 25 - Prob. 34PCh. 25 - The Boeing Company manufacturers many different...Ch. 25 - Prob. 1EI
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