Klean Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on clothing while managing heat. Y-Go has become very popular in undergarments for sports activities. Operating at capacity, the company can produce 1,046,000 Y-Go undergarments a year. The per unit and the total costs for an individual garment when the company operates at full capacity are as follows.
Per Undergarment | Total | |||||
Direct materials | $1.99 | $2,081,540 | ||||
Direct labor | 0.48 | 502,080 | ||||
Variable manufacturing overhead | 1.03 | 1,077,380 | ||||
Fixed manufacturing overhead | 1.53 | 1,600,380 | ||||
Variable selling expenses | 0.30 | 313,800 | ||||
Totals | $5.33 |
$5,575,180 |
The U.S. Army has approached Klean Fiber and expressed an interest in purchasing 249,900 Y-Go undergarments for soldiers in extremely warm climates. The Army would pay the unit cost for direct materials, direct labor, and variable manufacturing overhead costs. In addition, the Army has agreed to pay an additional $0.97 per undergarment to cover all other costs and provide a profit. Presently, Klean Fiber is operating at 70% capacity and does not have any other potential buyers for Y-Go. If Klean Fiber accepts the Army’s offer, it will not incur any variable selling expenses related to this order.
Prepare an incremental analysis for the Klean Fiber.
(Enter negative amounts using either a negative sign
preceding the number e.g. -45 or parentheses e.g.
(45).)
Reject Order |
Accept Order |
Net Income Increase (Decrease) |
|||||
Revenues | $ | $ | $ | ||||
Variable costs: | |||||||
Direct materials | |||||||
Direct labor | |||||||
Variable overhead | |||||||
Total variable costs | |||||||
Net income | $ | $ | $ |
Should Klean Fiber accept the Army's offer?
Klean Fiber should
accept/reject the Army’s offer. |
Reject order | Accept order | Net income increase(decrease) | |
Revenues | 0 | 1117053 | 1117053 |
Variable costs: | |||
Direct materials | 0 | 497301 | -497301 |
Direct labor | 0 | 119952 | -119952 |
Variable overhead | 0 | 257397 | -257397 |
Total variable costs | 0 | 874650 | -874650 |
Net income | 0 | 242403 | 242403 |
Klean Fiber should accept the Army’s offer. | |||
Formuals used: | |||
Revenues | 1117053 | =249900*(1.99+0.48+1.03+0.97) | |
Variable costs: | |||
Direct materials | 497301 | =249900*1.99 | |
Direct labor | 119952 | =249900*0.48 | |
Variable overhead | 257397 | =249900*1.03 |
Klean Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics...
Klean Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on clothing while managing heat. Y- Go has become very popular in undergarments for sports activities. Operating at capacity, the company can produce 1,065,000 Y-Go undergarments a year. The per unit and the total costs for an individual garment when the company operates at full capacity are as follows. Per Undergarment Total Direct materials $1.92 $2,044,800 Direct labor 0.43...
Klean Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria.... Send to Gradebook Prev Next > bmitted to Gradebook, Wed Feb 26, 2020, 6:12 22 PM( A -05:00 rcaNew York Question 8 View Policies Current Attempt in Progress Klean Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on clothing while managing heat. Y-Go has become very popular in undergarments...
Klean Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on clothing while managing heat. Y-Go has become very popular in undergarments for sports activities. Operating at capacity, the company can produce 1,087,000 Y-Go undergarments a year. The per unit and the total costs for an individual garment when the company operates at full capacity are as follows. Per Undergarment Total Direct materials $1.96 $2,130,520 Direct labor 0.41 445,670...
Current Attempt in Progress Klean Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on clothing while managing heat. Y. Go has become very popular in undergarments for sports activities. Operating at capacity, the company can produce 1,099.000 Y-Go undergarments a year. The per unit and the total costs for an individual garment when the company operates at full capacity are as follows. Per Undergarment Total Direct materials Direct...
Exercise 20-4 Klean Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on clothing while managing heat. Y-Go has become very popular in undergarments for sports activities. Operating at capacity, the company can produce 1,000,000 Y-Go undergarments a year. The per unit and the total costs for an individual garment when the company operates at full capacity are as follows. Total Direct materials Direct labor Variable manufacturing overhead Fixed...
LAELEZO Sheridan Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on clothing while managing heat. Y-Go has become very popular in undergarments for sports activities. Operating at capacity, the company can produce 1,010,000 Y-Go undergarments a year. The per unit and the total costs for an individual garment when the company operates at full capacity are as follows. Per Total Undergarment $1.91 0.41 Direct materials Direct labor Variable...
Accounting Help. I don't know how to do this. Thank you Klean Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on clothing while managing heat. Y-Go has become very popular as an undergarment for sports activities. Operating at capacity, the company can produce 1,057,800 undergarments of Y-Go a year. The per unit and the total costs for an individual garment when the company operates at full capacity are...
Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 34,000 Rets per year. Costs associated with this level of production and sales are given below: Unit Total Direct materials $ 20 $ 680,000 Direct labor 6 204,000 Variable manufacturing overhead 3 102,000 Fixed manufacturing overhead 5 170,000 Variable selling expense 4 136,000 Fixed selling expense 6 204,000 Total cost $ 44 $ 1,496,000 The Rets normally sell for...
Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 38,000 Rets per year. Costs associated with this level of production and sales are given below: Unit Total Direct materials $ 15 $ 570,000 Direct labor 8 304,000 Variable manufacturing overhead 3 114,000 Fixed manufacturing overhead 7 266,000 Variable selling expense 4 152,000 Fixed selling expense 6 228,000 Total cost $ 43 $ 1,634,000 The Rets normally sell for $48...
Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 40,000 Rets per year. Costs associated with this level of production and sales are given below: Unit Total Direct materials $ 25 $ 1,000,000 Direct labor 6 240,000 Variable manufacturing overhead 3 120,000 Fixed manufacturing overhead 7 280,000 Variable selling expense 4 160,000 Fixed selling expense 6 240,000 Total cost $ 51 $ 2,040,000 The Rets normally sell for $56...