Question

Given the following data: Sales (in units) 60,000 Selling price per unit 25 Manufacturing costs per...

Given the following data:

Sales (in units) 60,000

Selling price per unit 25

Manufacturing costs per unit:

Materials 5

Direct labor 4

Overhead

Variable 4

Fixed 6

Total 19

Gross margin 6

Selling and admin. Expenses per unit 2

Operating income 4

A company in a foreign market offer to buy and the offer specifies the following data

units to be sold 10,000

price per unit 13.01

Should the company sell this special order?

Homework Answers

Answer #1

ANSWER:

Fixed overhead is not relevant in decision whether to accept or reject the special offer, since fixed overhead will not increase due to the acceptance of special order.

Price per unit in Foregin market = $13

Variable cost per unit = Direct materials + Direct labor + Variable overhead + Selling and administrative expense

= 5+4+4+2

= $15

Since the price per unit in the special offer is less than variable cost per unit, hence special order should be rejected.

NOTE: Kindly comment if you need further assistance. Thanks AND PLEASE GIVE A POSITIVE RATING..If you are satisfied with the above answer.

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
Company XYZ produced and sold 8,500 units. The selling price per unit was OMR35. The variable...
Company XYZ produced and sold 8,500 units. The selling price per unit was OMR35. The variable manufacturing cost per unit was OMR10. The variable selling and administrative expenses per unit was OMR14. The total fixed expenses were OMR2,000. Calculate the total contribution margin. Select one: O a. OMR297,500 O b. OMR93,500 O c. OMR295,500 O d. OMR91,500 O e. OMR212,500 2.XYZ Company uses normal costing. Following are various cost and inventory data for the just completed year: Sales revenue OMR440,000;...
Calculate the Contribution Margin using the data below: Selling Price per unit $40 Variable Cost per...
Calculate the Contribution Margin using the data below: Selling Price per unit $40 Variable Cost per unit $18 Fixed Cost per unit $5 Selling/Admin Cost    $4 Selling Commission of 15% of the selling price per sale
Allard Manufacturing Company established the following standard price and cost data.   Sales price $ 10.00 per...
Allard Manufacturing Company established the following standard price and cost data.   Sales price $ 10.00 per unit   Variable manufacturing cost $ 6 per unit   Fixed manufacturing cost $ 3,000 total   Fixed selling and administrative cost $ 1,000 total      Allard planned to produce and sell 2,000 units. Actual production and sales amounted to 2,200 units. Required a. Prepare the pro forma income statement in contribution format that would appear in a master budget.        b. Prepare the pro forma income statement...
Selling price per unit $30.00 Variable costs per unit: Direct material $5.25 Direct manufacturing labour $2.15...
Selling price per unit $30.00 Variable costs per unit: Direct material $5.25 Direct manufacturing labour $2.15 Manufacturing overhead $1.64 Selling costs $1.85 Annual fixed costs $110,000 The Geraldo Inc. contribution margin ratio is 110.2% 142.5% 29.8% 70.2% 63.7% The Geraldo Inc. break-even point in sales dollars is $99,819. $77,193. $172,685. $172,684. $156,695. The Geraldo Inc. break-even point in units is 5,757 units. 3,502 units. 5,756 units. 6,059 units. 12,952 units.
Selling price per unit (package of 2 CDs)...................................... $27.00 Variable costs per unit: Direct material............................................................................................................... $5.50...
Selling price per unit (package of 2 CDs)...................................... $27.00 Variable costs per unit: Direct material............................................................................................................... $5.50 Direct labor...................................................................................................................... $6.00 Artist's royalties.............................................................................................................. $5.00 Manufacturing overhead.......................................................................................... $3.50 Selling expenses............................................................................................................ $2.50 Total variable costs per unit............................................................ $22.50 Annual fixed costs: Manufacturing overhead.......................................................................................... $192,000 Selling and administrative....................................................................................... $276,000 Total fixed costs................................................................................ $468,000 Forecasted annual sales volume (120,000 units)......................... $3,240,000 Management estimates that direct-labor costs will increase by 8% next year. How many units will the company have to sell next year to reach its...
Perez Manufacturing Company established the following standard price and cost data: Sales price $ 8.30 per...
Perez Manufacturing Company established the following standard price and cost data: Sales price $ 8.30 per unit Variable manufacturing cost $ 4.00 per unit Fixed manufacturing cost $ 2,500 total Fixed selling and administrative cost $ 600 total Perez planned to produce and sell 2,200 units. Actual production and sales amounted to 2,300 units. Assume that the actual sales price is $7.95 per unit and that the actual variable cost is $4.15 per unit. The actual fixed manufacturing cost is...
Direct Materials          $10 per unit Direct Labor                $20 per unit Variable OH costs    $10 per unit...
Direct Materials          $10 per unit Direct Labor                $20 per unit Variable OH costs    $10 per unit Fixed OH costs         $240,000 per year      In addition to the information provided above the Company also had:               Variable selling and administrative expenses    $4 per unit                Fixed selling and administrative expenses     $120,000 per year      Prepare and Income Statement for Vijay Company using the traditional absorption costing method and an income statement using the variable costing method assuming they sold 30,000...
Given the following information: Selling Price (per unit): $10,000 Variable Costs (per unit): $7,000 Fixed Costs:...
Given the following information: Selling Price (per unit): $10,000 Variable Costs (per unit): $7,000 Fixed Costs: $200,000 Required Each of these are separate situations: What is the break-even point in total sales in dollars? How many units need to be sold to make a profit of $20,000? How many units need to be sold to make a profit of $20,000 if fixed costs increase from $200,000 to $250,000? How many units would they need to sell if they wanted to...
The Mildmanner Corporation has the following data for 2018: Selling price per unit $15 Variable cost...
The Mildmanner Corporation has the following data for 2018: Selling price per unit $15 Variable cost per unit $9 Fixed costs $45,000 Units sold 10,000 units The margin of safety in units will be (round to the nearest whole unit) a.667. b.7,500. c.4,000. d.2,500.
Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 130...
Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 130 100 % Variable expenses 78 60 Contribution margin $ 52 40 % Fixed expenses are $86,000 per month and the company is selling 2,800 units per month. 2-a. Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher-quality components that increase the variable expense by $6 per unit and increase unit sales by 15%