The difference in costs between the variable alternative is used to calculate financial advantage and disadvantage. To calculate: The lowest price that W could bid for the order and still cover its incremental manufacturing cost .

Question

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Answer 1

Question

Chapter 7, Problem 7.31C

1.

To determine

Introduction: The difference in costs between the variable alternative is used to calculate financial advantage and disadvantage.

To calculate: The lowest price that W could bid for the order and still cover its incremental manufacturing cost.

1.

Expert Solution

Answer to Problem 7.31C

The relevant cost of special order is $23,200.

Explanation of Solution

Relevant cost of W for the one-time special order of 20,000 pounds

Particular	Amount
AG-5 300 pound per lot×20 lots =6,000 pound Substitute of BH-3 on one for one basis to its total 3500 pounds if BH-3 is not in this order, it will be salvaged for $600	3,000
The remaining 2500 pound be AG-5 at a cost of $1.20 per pound	4,200
KL-2 200 pound per lot×20 lots =4,000 pound at $1.05 per pounds
CW-7 150 pound per lot×20 lots =3,000 pound at $1.35 per pounds	4,050
DF—6 175 pound per lot×20 lots =3,500 pound. use 3000 pound in inventory at $0.60 per pound (40.70 market price-$0.10 handling charge) And purchase the remaining 500 pound at $0.70 per pound	2,150
Total direct material cost	14,000

The direct material cost is $14,000.

25DDLHs per lot ×20 lots =500 DLHsa

Particular	Amount $
400 DHLs×$14 per DHL	5600
100 DHLs×$21 per DHL	2100
Total Direct labor cost	7700

Hence the direct labor cost is $7,700

Variable overhead cost:

variable cost of the special order= direct material cost+Direct labor cost + variable overhead =$14,000+$7700+$1500=$23,200

Thus the relevant cost of special order is $23,200

2.

To determine

Introduction: The difference in costs between the variable alternative is used to calculate financial advantage and disadvantage.

The price that W should quote Z for each 20,000 pound lot of the new compound

2.

Expert Solution

Answer to Problem 7.31C

The selling price is $44,800

Explanation of Solution

Selling price:

Particular	Amount $
AG-5 ( 6000 pound ×$1.20 per pound)	7200
KL-2 ( 4000 pound ×$1.05 per pound)	4200
CW-7 ( 3000 pound ×$1.35 per pound)	4050
DF-6 ( 3500 pound ×$0.70 per pound)	2450
Total direct material cost	17900

The direct material cost is $17,900.

Particular	Amount in $
Regular time ( 450 DHL×$14 per DHL)	6300
Overtime premium 50 DHL×$21 per DHL	1050
Total direct labor cost	7350

Manufacturing overhead cost:

manufacturing overhead cost =Total direct labour hour ×Cost per direct labor hours=500×13.50=$6,750

The manufacturing overhead cost is $6,750

manufacturing cost = direct matrerial cost+direct labor cost+manufacturing overhead cost=17,900+7,350+6,750=$32,000

Particulars	Amount $
Full manufacturing cost	32,000
Markup	12,800
Selling price (full manufacturing cost plus markup)	44,800

Thus the selling price is $44,800

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Answer 2

Question

Chapter 7, Problem 7.31C

1.

To determine

Introduction: The difference in costs between the variable alternative is used to calculate financial advantage and disadvantage.

To calculate: The lowest price that W could bid for the order and still cover its incremental manufacturing cost.

1.

Expert Solution

Answer to Problem 7.31C

The relevant cost of special order is $23,200.

Explanation of Solution

Relevant cost of W for the one-time special order of 20,000 pounds

Particular	Amount
AG-5 300 pound per lot×20 lots =6,000 pound Substitute of BH-3 on one for one basis to its total 3500 pounds if BH-3 is not in this order, it will be salvaged for $600	3,000
The remaining 2500 pound be AG-5 at a cost of $1.20 per pound	4,200
KL-2 200 pound per lot×20 lots =4,000 pound at $1.05 per pounds
CW-7 150 pound per lot×20 lots =3,000 pound at $1.35 per pounds	4,050
DF—6 175 pound per lot×20 lots =3,500 pound. use 3000 pound in inventory at $0.60 per pound (40.70 market price-$0.10 handling charge) And purchase the remaining 500 pound at $0.70 per pound	2,150
Total direct material cost	14,000

The direct material cost is $14,000.

25DDLHs per lot ×20 lots =500 DLHsa

Particular	Amount $
400 DHLs×$14 per DHL	5600
100 DHLs×$21 per DHL	2100
Total Direct labor cost	7700

Hence the direct labor cost is $7,700

Variable overhead cost:

variable cost of the special order= direct material cost+Direct labor cost + variable overhead =$14,000+$7700+$1500=$23,200

Thus the relevant cost of special order is $23,200

2.

To determine

Introduction: The difference in costs between the variable alternative is used to calculate financial advantage and disadvantage.

The price that W should quote Z for each 20,000 pound lot of the new compound

2.

Expert Solution

Answer to Problem 7.31C

The selling price is $44,800

Explanation of Solution

Selling price:

Particular	Amount $
AG-5 ( 6000 pound ×$1.20 per pound)	7200
KL-2 ( 4000 pound ×$1.05 per pound)	4200
CW-7 ( 3000 pound ×$1.35 per pound)	4050
DF-6 ( 3500 pound ×$0.70 per pound)	2450
Total direct material cost	17900

The direct material cost is $17,900.

Particular	Amount in $
Regular time ( 450 DHL×$14 per DHL)	6300
Overtime premium 50 DHL×$21 per DHL	1050
Total direct labor cost	7350

Manufacturing overhead cost:

manufacturing overhead cost =Total direct labour hour ×Cost per direct labor hours=500×13.50=$6,750

The manufacturing overhead cost is $6,750

manufacturing cost = direct matrerial cost+direct labor cost+manufacturing overhead cost=17,900+7,350+6,750=$32,000

Particulars	Amount $
Full manufacturing cost	32,000
Markup	12,800
Selling price (full manufacturing cost plus markup)	44,800

Thus the selling price is $44,800

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Answer 3

Question

Chapter 7, Problem 7.31C

1.

To determine

Introduction: The difference in costs between the variable alternative is used to calculate financial advantage and disadvantage.

To calculate: The lowest price that W could bid for the order and still cover its incremental manufacturing cost.

1.

Expert Solution

Answer to Problem 7.31C

The relevant cost of special order is $23,200.

Explanation of Solution

Relevant cost of W for the one-time special order of 20,000 pounds

Particular	Amount
AG-5 300 pound per lot×20 lots =6,000 pound Substitute of BH-3 on one for one basis to its total 3500 pounds if BH-3 is not in this order, it will be salvaged for $600	3,000
The remaining 2500 pound be AG-5 at a cost of $1.20 per pound	4,200
KL-2 200 pound per lot×20 lots =4,000 pound at $1.05 per pounds
CW-7 150 pound per lot×20 lots =3,000 pound at $1.35 per pounds	4,050
DF—6 175 pound per lot×20 lots =3,500 pound. use 3000 pound in inventory at $0.60 per pound (40.70 market price-$0.10 handling charge) And purchase the remaining 500 pound at $0.70 per pound	2,150
Total direct material cost	14,000

The direct material cost is $14,000.

25DDLHs per lot ×20 lots =500 DLHsa

Particular	Amount $
400 DHLs×$14 per DHL	5600
100 DHLs×$21 per DHL	2100
Total Direct labor cost	7700

Hence the direct labor cost is $7,700

Variable overhead cost:

variable cost of the special order= direct material cost+Direct labor cost + variable overhead =$14,000+$7700+$1500=$23,200

Thus the relevant cost of special order is $23,200

2.

To determine

Introduction: The difference in costs between the variable alternative is used to calculate financial advantage and disadvantage.

The price that W should quote Z for each 20,000 pound lot of the new compound

2.

Expert Solution

Answer to Problem 7.31C

The selling price is $44,800

Explanation of Solution

Selling price:

Particular	Amount $
AG-5 ( 6000 pound ×$1.20 per pound)	7200
KL-2 ( 4000 pound ×$1.05 per pound)	4200
CW-7 ( 3000 pound ×$1.35 per pound)	4050
DF-6 ( 3500 pound ×$0.70 per pound)	2450
Total direct material cost	17900

The direct material cost is $17,900.

Particular	Amount in $
Regular time ( 450 DHL×$14 per DHL)	6300
Overtime premium 50 DHL×$21 per DHL	1050
Total direct labor cost	7350

Manufacturing overhead cost:

manufacturing overhead cost =Total direct labour hour ×Cost per direct labor hours=500×13.50=$6,750

The manufacturing overhead cost is $6,750

manufacturing cost = direct matrerial cost+direct labor cost+manufacturing overhead cost=17,900+7,350+6,750=$32,000

Particulars	Amount $
Full manufacturing cost	32,000
Markup	12,800
Selling price (full manufacturing cost plus markup)	44,800

Thus the selling price is $44,800

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Answer 4

Question

Chapter 7, Problem 7.31C

1.

To determine

Introduction: The difference in costs between the variable alternative is used to calculate financial advantage and disadvantage.

To calculate: The lowest price that W could bid for the order and still cover its incremental manufacturing cost.

1.

Expert Solution

Answer to Problem 7.31C

The relevant cost of special order is $23,200.

Explanation of Solution

Relevant cost of W for the one-time special order of 20,000 pounds

Particular	Amount
AG-5 300 pound per lot×20 lots =6,000 pound Substitute of BH-3 on one for one basis to its total 3500 pounds if BH-3 is not in this order, it will be salvaged for $600	3,000
The remaining 2500 pound be AG-5 at a cost of $1.20 per pound	4,200
KL-2 200 pound per lot×20 lots =4,000 pound at $1.05 per pounds
CW-7 150 pound per lot×20 lots =3,000 pound at $1.35 per pounds	4,050
DF—6 175 pound per lot×20 lots =3,500 pound. use 3000 pound in inventory at $0.60 per pound (40.70 market price-$0.10 handling charge) And purchase the remaining 500 pound at $0.70 per pound	2,150
Total direct material cost	14,000

The direct material cost is $14,000.

25DDLHs per lot ×20 lots =500 DLHsa

Particular	Amount $
400 DHLs×$14 per DHL	5600
100 DHLs×$21 per DHL	2100
Total Direct labor cost	7700

Hence the direct labor cost is $7,700

Variable overhead cost:

variable cost of the special order= direct material cost+Direct labor cost + variable overhead =$14,000+$7700+$1500=$23,200

Thus the relevant cost of special order is $23,200

2.

To determine

Introduction: The difference in costs between the variable alternative is used to calculate financial advantage and disadvantage.

The price that W should quote Z for each 20,000 pound lot of the new compound

2.

Expert Solution

Answer to Problem 7.31C

The selling price is $44,800

Explanation of Solution

Selling price:

Particular	Amount $
AG-5 ( 6000 pound ×$1.20 per pound)	7200
KL-2 ( 4000 pound ×$1.05 per pound)	4200
CW-7 ( 3000 pound ×$1.35 per pound)	4050
DF-6 ( 3500 pound ×$0.70 per pound)	2450
Total direct material cost	17900

The direct material cost is $17,900.

Particular	Amount in $
Regular time ( 450 DHL×$14 per DHL)	6300
Overtime premium 50 DHL×$21 per DHL	1050
Total direct labor cost	7350

Manufacturing overhead cost:

manufacturing overhead cost =Total direct labour hour ×Cost per direct labor hours=500×13.50=$6,750

The manufacturing overhead cost is $6,750

manufacturing cost = direct matrerial cost+direct labor cost+manufacturing overhead cost=17,900+7,350+6,750=$32,000

Particulars	Amount $
Full manufacturing cost	32,000
Markup	12,800
Selling price (full manufacturing cost plus markup)	44,800

Thus the selling price is $44,800

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Answer 5

Chapter 7, Problem 7.31C

1.

To determine

Introduction: The difference in costs between the variable alternative is used to calculate financial advantage and disadvantage.

To calculate: The lowest price that W could bid for the order and still cover its incremental manufacturing cost.

1.

Expert Solution

Answer to Problem 7.31C

The relevant cost of special order is $23,200.

Explanation of Solution

Relevant cost of W for the one-time special order of 20,000 pounds

Particular	Amount
AG-5 300 pound per lot×20 lots =6,000 pound Substitute of BH-3 on one for one basis to its total 3500 pounds if BH-3 is not in this order, it will be salvaged for $600	3,000
The remaining 2500 pound be AG-5 at a cost of $1.20 per pound	4,200
KL-2 200 pound per lot×20 lots =4,000 pound at $1.05 per pounds
CW-7 150 pound per lot×20 lots =3,000 pound at $1.35 per pounds	4,050
DF—6 175 pound per lot×20 lots =3,500 pound. use 3000 pound in inventory at $0.60 per pound (40.70 market price-$0.10 handling charge) And purchase the remaining 500 pound at $0.70 per pound	2,150
Total direct material cost	14,000

The direct material cost is $14,000.

25DDLHs per lot ×20 lots =500 DLHsa

Particular	Amount $
400 DHLs×$14 per DHL	5600
100 DHLs×$21 per DHL	2100
Total Direct labor cost	7700

Hence the direct labor cost is $7,700

Variable overhead cost:

variable cost of the special order= direct material cost+Direct labor cost + variable overhead =$14,000+$7700+$1500=$23,200

Thus the relevant cost of special order is $23,200

2.

To determine

Introduction: The difference in costs between the variable alternative is used to calculate financial advantage and disadvantage.

The price that W should quote Z for each 20,000 pound lot of the new compound

2.

Expert Solution

Answer to Problem 7.31C

The selling price is $44,800

Explanation of Solution

Selling price:

Particular	Amount $
AG-5 ( 6000 pound ×$1.20 per pound)	7200
KL-2 ( 4000 pound ×$1.05 per pound)	4200
CW-7 ( 3000 pound ×$1.35 per pound)	4050
DF-6 ( 3500 pound ×$0.70 per pound)	2450
Total direct material cost	17900

The direct material cost is $17,900.

Particular	Amount in $
Regular time ( 450 DHL×$14 per DHL)	6300
Overtime premium 50 DHL×$21 per DHL	1050
Total direct labor cost	7350

Manufacturing overhead cost:

manufacturing overhead cost =Total direct labour hour ×Cost per direct labor hours=500×13.50=$6,750

The manufacturing overhead cost is $6,750

manufacturing cost = direct matrerial cost+direct labor cost+manufacturing overhead cost=17,900+7,350+6,750=$32,000

Particulars	Amount $
Full manufacturing cost	32,000
Markup	12,800
Selling price (full manufacturing cost plus markup)	44,800

Thus the selling price is $44,800

Answer 6

Chapter 7, Problem 7.31C

1.

To determine

Introduction: The difference in costs between the variable alternative is used to calculate financial advantage and disadvantage.

To calculate: The lowest price that W could bid for the order and still cover its incremental manufacturing cost.

1.

Expert Solution

Answer to Problem 7.31C

The relevant cost of special order is $23,200.

Explanation of Solution

Relevant cost of W for the one-time special order of 20,000 pounds

Particular	Amount
AG-5 300 pound per lot×20 lots =6,000 pound Substitute of BH-3 on one for one basis to its total 3500 pounds if BH-3 is not in this order, it will be salvaged for $600	3,000
The remaining 2500 pound be AG-5 at a cost of $1.20 per pound	4,200
KL-2 200 pound per lot×20 lots =4,000 pound at $1.05 per pounds
CW-7 150 pound per lot×20 lots =3,000 pound at $1.35 per pounds	4,050
DF—6 175 pound per lot×20 lots =3,500 pound. use 3000 pound in inventory at $0.60 per pound (40.70 market price-$0.10 handling charge) And purchase the remaining 500 pound at $0.70 per pound	2,150
Total direct material cost	14,000

The direct material cost is $14,000.

25DDLHs per lot ×20 lots =500 DLHsa

Particular	Amount $
400 DHLs×$14 per DHL	5600
100 DHLs×$21 per DHL	2100
Total Direct labor cost	7700

Hence the direct labor cost is $7,700

Variable overhead cost:

variable cost of the special order= direct material cost+Direct labor cost + variable overhead =$14,000+$7700+$1500=$23,200

Thus the relevant cost of special order is $23,200

Answer 7

Chapter 7, Problem 7.31C

1.

To determine

Introduction: The difference in costs between the variable alternative is used to calculate financial advantage and disadvantage.

To calculate: The lowest price that W could bid for the order and still cover its incremental manufacturing cost.

Answer 8

1.

Expert Solution

Answer to Problem 7.31C

The relevant cost of special order is $23,200.

Answer 9

1.

Expert Solution

Answer 10

1.

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

Relevant cost of W for the one-time special order of 20,000 pounds

Particular	Amount
AG-5 300 pound per lot×20 lots =6,000 pound Substitute of BH-3 on one for one basis to its total 3500 pounds if BH-3 is not in this order, it will be salvaged for $600	3,000
The remaining 2500 pound be AG-5 at a cost of $1.20 per pound	4,200
KL-2 200 pound per lot×20 lots =4,000 pound at $1.05 per pounds
CW-7 150 pound per lot×20 lots =3,000 pound at $1.35 per pounds	4,050
DF—6 175 pound per lot×20 lots =3,500 pound. use 3000 pound in inventory at $0.60 per pound (40.70 market price-$0.10 handling charge) And purchase the remaining 500 pound at $0.70 per pound	2,150
Total direct material cost	14,000

The direct material cost is $14,000.

25DDLHs per lot ×20 lots =500 DLHsa

Particular	Amount $
400 DHLs×$14 per DHL	5600
100 DHLs×$21 per DHL	2100
Total Direct labor cost	7700

Hence the direct labor cost is $7,700

Variable overhead cost:

variable cost of the special order= direct material cost+Direct labor cost + variable overhead =$14,000+$7700+$1500=$23,200

Thus the relevant cost of special order is $23,200

Answer 13

2.

To determine

Introduction: The difference in costs between the variable alternative is used to calculate financial advantage and disadvantage.

The price that W should quote Z for each 20,000 pound lot of the new compound

2.

Expert Solution

Answer to Problem 7.31C

The selling price is $44,800

Explanation of Solution

Selling price:

Particular	Amount $
AG-5 ( 6000 pound ×$1.20 per pound)	7200
KL-2 ( 4000 pound ×$1.05 per pound)	4200
CW-7 ( 3000 pound ×$1.35 per pound)	4050
DF-6 ( 3500 pound ×$0.70 per pound)	2450
Total direct material cost	17900

The direct material cost is $17,900.

Particular	Amount in $
Regular time ( 450 DHL×$14 per DHL)	6300
Overtime premium 50 DHL×$21 per DHL	1050
Total direct labor cost	7350

Manufacturing overhead cost:

manufacturing overhead cost =Total direct labour hour ×Cost per direct labor hours=500×13.50=$6,750

The manufacturing overhead cost is $6,750

manufacturing cost = direct matrerial cost+direct labor cost+manufacturing overhead cost=17,900+7,350+6,750=$32,000

Particulars	Amount $
Full manufacturing cost	32,000
Markup	12,800
Selling price (full manufacturing cost plus markup)	44,800

Thus the selling price is $44,800

Answer 14

2.

To determine

Introduction: The difference in costs between the variable alternative is used to calculate financial advantage and disadvantage.

The price that W should quote Z for each 20,000 pound lot of the new compound

Answer 15

2.

Expert Solution

Answer to Problem 7.31C

The selling price is $44,800

Answer 16

2.

Expert Solution

Answer 17

2.

Expert Solution

Answer 18

Expert Solution

Answer 19

Explanation of Solution

Selling price:

Particular	Amount $
AG-5 ( 6000 pound ×$1.20 per pound)	7200
KL-2 ( 4000 pound ×$1.05 per pound)	4200
CW-7 ( 3000 pound ×$1.35 per pound)	4050
DF-6 ( 3500 pound ×$0.70 per pound)	2450
Total direct material cost	17900

The direct material cost is $17,900.

Particular	Amount in $
Regular time ( 450 DHL×$14 per DHL)	6300
Overtime premium 50 DHL×$21 per DHL	1050
Total direct labor cost	7350

Manufacturing overhead cost:

manufacturing overhead cost =Total direct labour hour ×Cost per direct labor hours=500×13.50=$6,750

The manufacturing overhead cost is $6,750

manufacturing cost = direct matrerial cost+direct labor cost+manufacturing overhead cost=17,900+7,350+6,750=$32,000

Particulars	Amount $
Full manufacturing cost	32,000
Markup	12,800
Selling price (full manufacturing cost plus markup)	44,800

Thus the selling price is $44,800

Answer 20

Ch. 7 - Prob. 7.1Q Ch. 7 - Prob. 7.2Q Ch. 7 - Prob. 7.3Q Ch. 7 - Prob. 7.4Q Ch. 7 - Prob. 7.5Q Ch. 7 - Prob. 7.6Q Ch. 7 - Prob. 7.7Q Ch. 7 - Prob. 7.8Q Ch. 7 - Prob. 7.9Q Ch. 7 - Prob. 7.10Q

The difference in costs between the variable alternative is used to calculate financial advantage and disadvantage. To calculate: The lowest price that W could bid for the order and still cover its incremental manufacturing cost .

Introduction: The difference in costs between the variable alternative is used to calculate financial advantage and disadvantage. To calculate: The lowest price that W could bid for the order and still cover its incremental manufacturing cost.

Answer to Problem 7.31C

Explanation of Solution

Introduction: The difference in costs between the variable alternative is used to calculate financial advantage and disadvantage. The price that W should quote Z for each 20,000 pound lot of the new compound

Answer to Problem 7.31C

Explanation of Solution

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Chapter 7 Solutions

Introduction: The difference in costs between the variable alternative is used to calculate financial advantage and disadvantage.

To calculate: The lowest price that W could bid for the order and still cover its incremental manufacturing cost.

Introduction: The difference in costs between the variable alternative is used to calculate financial advantage and disadvantage.

The price that W should quote Z for each 20,000 pound lot of the new compound