Regular sales are not affected by the special order. There is a special order received for 2700 chairs at a price of $350 per unit. f the company decides to go ahead with the special order then fixed costs increase by $6,600, and variable marketing and administrative costs for that order are $1 per unit, f a special sales order is accepted how would operating income be affected? decrease of 222,000 increase of 287,700 increase of 81,000 increase of 296,000
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- Dimitri Designs has capacity to produce 30,000 desk chairs per year and is currently selling all 30,000 for $240 each. Country Enterprises has approached Dimitri to buy 800 chairs for $210 each. Dimitris normal variable cost is $165 per chair, including $50 per unit in direct labor per chair. Dimitri can produce the special order on an overtime shift, which means that direct labor would be paid overtime at 150% of the normal pay rate. The annual fixed costs will be unaffected by the special order and the contract will not disrupt any of Dimitris other operations. What will be the impact on profits of accepting the order?Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is 30. The cost of holding one unit of inventory for one year is 15.00. Currently, Ottis places 160 orders of 4,000 plastic housing units per year. Required: 1. Compute the economic order quantity. 2. Compute the ordering, carrying, and total costs for the EOQ. 3. How much money does using the EOQ policy save the company over the policy of purchasing 4,000 plastic housing units per order?Zena Technology sells arc computer printers for $55 per unit. Unit product costs are: A special order to purchase 15,000 arc printers has recently been received from another company and Zena has idle capacity to fill the order. Zena will incur an additional $2 per printer for additional labor costs due to a slight modification the buyer wants made to the original product. One-third of the manufacturing overhead costs is fixed and will be incurred no matter how many units are produced. When negotiating the price, what is the minimum selling price that Zena should accept for this special order?
- Oat Treats manufactures various types of cereal bars featuring oats. Simmons Cereal Company has approached Oat Treats with a proposal to sell the company its top selling oat cereal bar at a price of $27,500 for 20,000 bars. The costs shown are associated with production of 20,000 oat bars currently. The manufacturing overhead consists of $3,000 of variable costs with the balance being allocated to fixed costs. Should Oat Treats make or buy the oat bars?Deuce Sporting Goods manufactures a high-end model tennis racket. The company’s forecasted income statement for the year, before any special orders, is as follows: Fixed costs included in the forecasted income statement are $400,000 in manufacturing cost of goods sold and $200,000 in selling expenses. A new client placed a special order with Deuce, offering to buy 1,000 tennis rackets for $100.00 each. The company will incur no additional selling expenses if it accepts the special order. Assuming that Deuce has sufficient capacity to manufacture 1,000 more tennis rackets, by what amount would differential income increase (decrease) as a result of accepting the special order? (Hint: First compute the variable cost per unit relevant to this decision.)Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is 30. The cost of holding one unit of inventory for one year is 15.00. Currently, Ottis places 160 orders of 4,000 plastic housing units per year. Required: 1. Compute the annual ordering cost. 2. Compute the annual carrying cost. 3. Compute the cost of Ottiss current inventory policy. Is this the minimum cost? Why or why not?
- Lego Company manufactures chairs. Annual maximum capacity is 100,000. It currently produces and sells 75,000 chairs per year. The following information relates to current production: Sale price per unit $430 Variable costs per unit: Manufacturing Marketing and administrative Total fixed costs: Manufacturing $240 $80 $760,000 $220,000 Marketing and administrative Regular sales are not affected by the special order. There is a special order received for 2700 chairs at a price of $350 per unit. If the company decides to go ahead with the special order then fixed costs increase by $6,600, and variable marketing and administrative costs for that order are $1 per unit, If a special sales order is accepted how would operating income be affected? decrease of 222,000 increase of 287,700 increase of 81,000 increase of 296,0004 Lowwater Sailmakers manufactures sails for sailboats. The company has the capacity to produce 25,000 sails per year, but is currently producing and selling 20,000 sails per year. The following information relates to current production. If a special sales order is accepted for 4,500 sails at a price of $120 per unit, and fixed costs remain unchanged, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.) Sale price per unit $150 Variable costs per unit: Manufacturing Marketing and administratrve $60 $20 Total fixed costs: Manufacturing Marketing and administrative $600,000 S200,000 Increase by $160,000 ) Increase by $150,000 ) Increase by $140,000 Increase by S170,000 ) Increase by S180,000 ()Chip Jones ahoy manufactures the cloth for sails. The company has the capacity to produce 36,000 sails per year and is currently producing and selling 25,000 sails per year. The following information relates to current production: $175 Sales price per unit Variable costs per unit: Manufacturing Selling and administrative Total fixed costs: Manufacturing Selling and administrative LEFE $62 $20 $700,000 $250,000 Assume that a special pricing order is accepted for 5600 sails at a sales price of $150 per unit. This special order requires both variable manufacturing and variable selling and administrative costs, as well as incremental fixed costs of $400,000. What will be the impact on operating income? Operating income decreases by $380,800.
- Lowwater Sailmakers manufactures sails for sailboats. The company has the capacity to produce 25,000 sails per year, but is currently producing and selling 20,.000 sails per year, The following information relates to current production. If a special sales order is accepted for 2,000 sails at a price of $87 per unit, and fixed costs increase by $20,000, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.) Sale price per unit $150 Variable costs unit: per Manufacturing Marketing and administrative $60 $20 Total fixed costs: Manufacturing Marketing and administrative S600,000 $200 000 Increase by S14,000 Decrease by S4,000 ) Decrease by S14,000 ) Decrease by S6,000 () Increase by S6,000 ()Smooth Company manufactures decorative mugs and has been approached by a new customer with an offer to purchase 15,000 units at a price of P70/unit. The new customer is geographically separated from Smooth Company's other customers and existing sales will not be affected. Smooth Company normally produce and sell only 65,000 units in the year. The normal sales price is P120 per unit. Production cost information is as follows: Direct materials P30.00 P22.50 P11.50 Direct labor Variable overhead Fixed overhead P18.00 If Smooth Company accepted the order, they would have to purchase a special logo labelling machine that will cost P120,000. The machine will be used to label the 15,000 units and will be scrapped afterwards. In addition, each logo requires additional direct materials of P2.00. Which alternative is best for Smooth Company? By how much profit will increase or decrease if the order is accepted?Comfort Ride manufactures seats for airplanes. The company has the capacity to produce 100,000 seats per year, but currently produces and sells 75,000 seats per year. The following information relates to current production of seats: Sale price per unit $430 Variable costs per unit: Manufacturing Marketing and administrative $260 $70 Total fixed costs: Manufacturing Marketing and administrative $760,000 $240,000 If a special sales order is accepted for 4,400 seats at a price of $345 per unit, fixed costs remain unchanged, and no variable marketing and administrative costs will be incurred for this order, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.) O A. Increase by $374,000 B. Decrease by $374,000 C. Increase by $2,662,000 D. Increase by $66,000