Falcon Co. produces a single product. Its normal selling price is $28 per unit. The variablecosts are $18 per unit. Fixed costs are $21,800 for a normal production run of 5,000 unitsper month. Falcon received a request for a special order that would not interfere with normalsales. The order was for 1,400 units with a special price of $20 per unit. Falcon has thecapacity to handle the special order, and for this order, a variable selling cost of $2 per unitwould be eliminated. If the order is accepted, the differential effect on profit would be a(n)◇ a. increase of $4,480O b. decrease of $3,360c. increase of $7,280d. increase of $5,600?13

Step 1:Computation of Contribution margin ParticularsAmountSpecial price of order$ 20 per unitLess:…

Answered: Falcon Co. produces a single product.…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 54P

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Falcon Co. produces a single product. Its normal selling price is $30.00 per unit. The variable costs are $19.00 per unit. Fixed costs are $25,000 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,500 units with a special price of $20.00 per unit. Falcon has the capacity to handle the special order, and for this order, a variable selling cost of $1.00 per unit would be eliminated. If the order is accepted, the differential effect on profit would be a(n)
Falcon Co. produces a single product. Its normal selling price is $30.00 per unit. The variable costs are $19.00 per unit. Fixed costs are $25,000 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,500 units with a special price of $20.00 per unit. Falcon has the capacity to handle the special order, and for this order, a variable selling cost of $1.00 per unit would be eliminated. If the order is accepted, the differential effect on profit would be a(n) a.increase of $3,000 b.increase of $1,500 c.decrease of $750 d.decrease of $4,500
Falcon Co. produces a single product. Its normal selling price is $25 per unit. The variable costs are $18 per unit. Fixed costs are $22,500 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,500 units with a special price of $19 per unit. Falcon has the capacity to handle the special order, and for this order, a variable selling cost of $2 per unit would be eliminated. If the order is accepted, the differential effect on profit would be a(n) a. increase of $4,500 b. decrease of $2,700 C. increase of $5,850 d. increase of $3,600
Falcon Co. produces a single product. Its normal selling price is $30 per unit. The variable costs are $19 per unit. Fixed costs are $25,000 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,500 units with a special price of $20 per unit. Falcon has the capacity to handle the special order, and for this order, a variable selling cost of $1 per unit would be eliminated.If the order is accepted, what would be the impact on net income? a.decrease of $750 b.increase of $3,000 c.increase of $1,500 d.decrease of $4,500
Falcon Co. produces a single product. Its normal selling price is $26 per unit. The variable costs are $17 per unit. Fixed costs are $22,600 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,300 units with a special price of $19 per unit. Falcon has the capacity to handle the special order, and for this order, a variable selling cost of $2 per unit would be eliminated. If the order is accepted, what would be the impact on net income? a.decrease of $3,120 b.increase of $4,160 c.increase of $5,200 d.increase of $6,760
Use this information for Falcon Co. to answer the question that follow. Falcon Co. produces a single product. Its normal selling price is $25 per unit. The variable costs are $15 per unit. Fixed costs are $18,800 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,580 units with a special price of $21 per unit. Falcon has the capacity to handle the special order, and for this order, a variable selling cost of $2 per unit would be eliminated. If the order is accepted, what would be the impact on net income? a.increase of $10,112 b.increase of $16,432 c.decrease of $7,584 d.increase of $12,640
Falcon Co. produces a single product. Its normal selling price is $27 per unit. The variable costs are $17 per unit. Fixed costs are $21,400 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,530 units with a special price of $19 per unit. Falcon has the capacity to handle the special order, and for this order, a variable selling cost of $2 per unit would be eliminated. If the order is accepted, the differential effect on profit would be a(n) O a increase of $4,896 O b. increase of $7,956 Oc. increase of $6,120 O d. decrease of $3.672
Use this information for Falcon Co. to answer the question that follow.Falcon Co. produces a single product. Its normal selling price is $30 per unit. The variable costs are $19 per unit. Fixed costs are $25,000 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,500 units with a special price of $20 per unit. Falcon has the capacity to handle the special order, and for this order, a variable selling cost of $1 per unit would be eliminated.If the order is accepted, what would be the impact on net income?
Diskmar has received a special order for 2,000 units of its product at a special price of $75. The product normally sells for $100 and has the following manufacturing costs:Direct material costs are $30; Direct labor costs are $20; and Variable Overhead costs are $15. Assume that Diskmar has sufficient capacity to fill the order without harming normal production and sales. a. If Diskmar accepts the order, what effect will the order have on the company's short-term profit? b. What minimum price should Diskmar charge to achieve a $25,000 incremental profit? c. Now assume Diskmar is currently operating at full capacity and cannot fill the order without harming normal production and sales. If Diskmar accepts the order, what effect will the order have on the company's short-term profit?
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
Sundial Company manufactures and sells watches for $42 each. Tick-Tock Company has offered Sundial $30 per watch for a one-time order of 5,600 watches. The total manufacturing cost per watch is $30 per unit and consists of variable costs of $22 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? O A. decrease of $168,000 O B. increase of $168,000 O C. decrease of $44,800 O D. increase of $44,800
Finn Flying Company produces and sells kites for $51. The company has the capacity to produce 10,600 kites each period. At capacity, the costs assigned to each unit are as follows: Unit-level costs $31 Product-level costs $16 Facility-level costs $11 The company has received a special order for 230 kites. Assuming that no sales to regular customers will be lost if the order is accepted, at what selling price will the company be indifferent between accepting and rejecting the special order? $70 $60 $31 $65

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