Question

Decision on Accepting Additional Business Country Jeans Co. has an annual plant capacity of 65,600 units,...

Decision on Accepting Additional Business

Country Jeans Co. has an annual plant capacity of 65,600 units, and current production is 44,900 units. Monthly fixed costs are $41,400, and variable costs are $25 per unit. The present selling price is $35 per unit. On November 12 of the current year, the company received an offer from Miller Company for 16,700 units of the product at $26 each. Miller Company will market the units in a foreign country under its own brand name. The additional business is not expected to affect the domestic selling price or quantity of sales of Country Jeans Co.

a. Prepare a differential analysis dated November 12 on whether to reject (Alternative 1) or accept (Alternative 2) the Miller order. If an amount is zero, enter zero "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Differential Analysis
Reject Order (Alt. 1) or Accept Order (Alt. 2)
November 12
Reject
Order
(Alternative 1)
Accept
Order
(Alternative 2)
Differential
Effect
on Income
(Alternative 2)
Revenues $ $ $
Costs:
Variable manufacturing costs
Income (Loss) $ $ $

b. Having unused capacity available is to this decision. The differential revenue is than the differential cost. Thus, accepting this additional business will result in a net .

c. What is the minimum price per unit that would produce a positive contribution margin? Round your answer to two decimal places.
$

Check My Work2 more Check My Work uses remaining.

Homework Answers

Answer #2

a.

Differential Analysis
November 12
Reject
Order
(Alternative 1)
Accept
Order
(Alternative 2)
Differential
Effect
on Income
(Alternative 2)
Units 44900 61600 16700
Revenues $1,571,500 $2,005,700 $434,200
Costs:
Variable manufacturing costs @ $25 per unit 1,122,500 1,540,000 417,500
Income (Loss) $449,000 $465,700 $16,700

b. Co. should accept this order as the net income of the company will increase by $16,700.

c. Minimum price per unit that would produce a positive contribution margin would be $25, if the price goes down than this it will give a negative contribution margin.

answered by: anonymous
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Decision on Accepting Additional Business Country Jeans Co. has an annual plant capacity of 64,000 units,...
Decision on Accepting Additional Business Country Jeans Co. has an annual plant capacity of 64,000 units, and current production is 43,200 units. Monthly fixed costs are $39,700, and variable costs are $25 per unit. The present selling price is $37 per unit. On November 12 of the current year, the company received an offer from Miller Company for 14,700 units of the product at $28 each. Miller Company will market the units in a foreign country under its own brand...
Decision on Accepting Additional Business Country Jeans Co. has an annual plant capacity of 66,900 units,...
Decision on Accepting Additional Business Country Jeans Co. has an annual plant capacity of 66,900 units, and current production is 45,100 units. Monthly fixed costs are $38,700, and variable costs are $25 per unit. The present selling price is $36 per unit. On November 12 of the current year, the company received an offer from Miller Company for 14,600 units of the product at $28 each. Miller Company will market the units in a foreign country under its own brand...
Decision on Accepting Additional Business Homestead Jeans Co. has an annual plant capacity of 64,400 units,...
Decision on Accepting Additional Business Homestead Jeans Co. has an annual plant capacity of 64,400 units, and current production is 46,300 units. Monthly fixed costs are $40,500, and variable costs are $25 per unit. The present selling price is $36 per unit. On November 12 of the current year, the company received an offer from Dawkins Company for 14,600 units of the product at $28 each. Dawkins Company will market the units in a foreign country under its own brand...
Decision on Accepting Additional Business Homestead Jeans Co. has an annual plant capacity of 66,400 units,...
Decision on Accepting Additional Business Homestead Jeans Co. has an annual plant capacity of 66,400 units, and current production is 43,100 units. Monthly fixed costs are $41,300, and variable costs are $25 per unit. The present selling price is $33 per unit. On November 12 of the current year, the company received an offer from Dawkins Company for 14,300 units of the product at $27 each. Dawkins Company will market the units in a foreign country under its own brand...
Decision on Accepting Additional Business Down Home Jeans Co. has an annual plant capacity of 63,400...
Decision on Accepting Additional Business Down Home Jeans Co. has an annual plant capacity of 63,400 units, and current production is 46,100 units. Monthly fixed costs are $39,500, and variable costs are $25 per unit. The present selling price is $38 per unit. On November 12 of the current year, the company received an offer from Fields Company for 16,400 units of the product at $28 each. Fields Company will market the units in a foreign country under its own...
#10 Decision on Accepting Additional Business Homestead Jeans Co. has an annual plant capacity of 63,400...
#10 Decision on Accepting Additional Business Homestead Jeans Co. has an annual plant capacity of 63,400 units, and current production is 43,600 units. Monthly fixed costs are $38,000, and variable costs are $25 per unit. The present selling price is $35 per unit. On November 12 of the current year, the company received an offer from Dawkins Company for 16,000 units of the product at $27 each. Dawkins Company will market the units in a foreign country under its own...
#10 Decision on Accepting Additional Business Homestead Jeans Co. has an annual plant capacity of 63,400...
#10 Decision on Accepting Additional Business Homestead Jeans Co. has an annual plant capacity of 63,400 units, and current production is 43,600 units. Monthly fixed costs are $38,000, and variable costs are $25 per unit. The present selling price is $35 per unit. On November 12 of the current year, the company received an offer from Dawkins Company for 16,000 units of the product at $27 each. Dawkins Company will market the units in a foreign country under its own...
Decision on Accepting Additional Business Down Home Jeans Co. has an annual plant capacity of 65,800...
Decision on Accepting Additional Business Down Home Jeans Co. has an annual plant capacity of 65,800 units, and current production is 44,300 units. Monthly fixed costs are $41,600, and variable costs are $25 per unit. The present selling price is $38 per unit. On November 12 of the current year, the company received an offer from Fields Company for 13,400 units of the product at $27 each. Fields Company will market the units in a foreign country under its own...
Country Jeans Co. has an annual plant capacity of 64,100 units, and current production is 45,000...
Country Jeans Co. has an annual plant capacity of 64,100 units, and current production is 45,000 units. Monthly fixed costs are $38,000, and variable costs are $25 per unit. The present selling price is $33 per unit. On November 12 of the current year, the company received an offer from Miller Company for 16,500 units of the product at $27 each. Miller Company will market the units in a foreign country under its own brand name. The additional business is...
eBook Calculator Print Item Decision on Accepting Additional Business Homestead Jeans Co. has an annual plant...
eBook Calculator Print Item Decision on Accepting Additional Business Homestead Jeans Co. has an annual plant capacity of 64,900 units, and current production is 46,000 units. Monthly fixed costs are $41,000, and variable costs are $25 per unit. The present selling price is $36 per unit. On November 12 of the current year, the company received an offer from Dawkins Company for 13,000 units of the product at $29 each. Dawkins Company will market the units in a foreign country...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT