Construction Accounting And Financial Management (4th Edition)
4th Edition
ISBN: 9780135232873
Author: Steven J. Peterson MBA PE
Publisher: PEARSON
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Question
Chapter 4, Problem 10P
To determine
Ascertain the estimated cost at completion of project and variance for each cost.
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Adams Furniture receives a special order for 10 sofas for a special price of $6,000. The direct materials and direct labor for each sofa
are $140. In addition, supervision and other fixed overhead costs average $160 per sofa.
a1. What is the impact on operating income from accepting the special order?
a2. Based solely on a short-term financial analysis, should Adams accept the special order?
b1. If Adams is currently operating at full capacity, what would be the opportunity cost per unit for lost sales to regular customers if the
special sales order is accepted and the selling price per unit on regular sales equals $900?
b2. Based solely on a short-term financial analysis, should Adams accept the special order if it is currently operating at full capacity?
Complete this question by entering your answers in the tabs below.
Req A1
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Req A1
What is the impact on operating income from accepting the special order?
Operating income would
per sofa.
Yes
ONO
Reg A2
Req A1…
A company is negotiating with a potential supplier for the purchase of 100,000 widgets. The company estimates that the supplier’s variable costs are $5 per unit andthat the fixed costs, depreciation, overhead, and so on, are $50,000. The supplierquotes a price of $10 per unit. Calculate the estimated average cost per unit. do youthink $10 is too much to pay? Could the purchasing department negotiate a betterprice? How?
National Investor Group is opening an office in Portland, Oregon. Fixed monthly costs are office rent ($8,10), utilities ($2,000), special telephone lines ($1,500), a connection with an online brokerage service ($2,500), and the salary of a finanical planner ($5,200). Variable costs include payments to the financial planner (9% of revenue), advertising (11% of revenue), supplies and postage (4% of revenue), and usage fees for the telephone lines and computerized brokerage service (6% of revenue).
REQUIREMENTS
:Use the contribution margin ratio approach to compute National's breakeven revenue in dollars. If the average trade leads to $1,000 in revenue for National, how manhy trades must be made to break even?
:Use the equation approach to compute the dollar revenues needed to earn a monthly target profit of $12,600.
:Graph national's CVP relationships. Assume that an average trade leads to $1,000 in revenue for National. Show the breakeven point, the sales revenue line, the fixed cost…
Chapter 4 Solutions
Construction Accounting And Financial Management (4th Edition)
Ch. 4 - Define committed costs and provide two examples of...Ch. 4 - Why is labor seldom a committed cost?Ch. 4 - Prob. 3DQCh. 4 - What are overbillings and how do they occur?Ch. 4 - Prob. 5DQCh. 4 - What are the six key principals of internal...Ch. 4 - What should you look for in a construction...Ch. 4 - Prob. 8PCh. 4 - Prob. 9PCh. 4 - Prob. 10P
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