Normal Volume | Per unit | Additional Volume | Combined Total | |
Sales Revenue | $ 7,500,000.00 | $ 15.00 | $ 600,000.00 | $ 8,100,000.00 |
Costs and expenses : | ||||
Direct Materials | $ 1,000,000.00 | $ 2.00 | $ 100,000.00 | $ 1,100,000.00 |
Direct labor | $ 2,000,000.00 | $ 4.00 | $ 200,000.00 | $ 2,200,000.00 |
Overhead | $ 500,000.00 | $ 1.00 | $ 80,000.00 | $ 580,000.00 |
Selling Expenses | $ 750,000.00 | $ 1.50 | $ 75,000.00 | $ 825,000.00 |
Administrative Expenses | $ 1,285,000.00 | $ 2.57 | $ 215,000.00 | $ 1,500,000.00 |
Total Costs and expenses | $ 5,535,000.00 | $ 670,000.00 | $ 6,205,000.00 | |
Net Income | $ 1,965,000.00 | $ (70,000.00) | $ 1,895,000.00 |
Additional Volume Sales = 50000 x $12
Per unit costs = Normal volume / 500000
Direct material, direct labor and selling expenses for additional
volume = Price per unit x 50000
Overhead for additional volume = $500000 x 16% = $80000
Since there is incremental loss of $70000, therefore offer should be rejected.
Exercise 23-2 Accept new business or not LO A1 Farrow Co. expects to sell 500,000 units...
Exercise 23-2 Accept new business or not LO A1 Farrow Co. expects to sell 300,000 units of its product in the next period with the following results. $4,500,000 Sales (300,000 units) Costs and expenses Direct materials Direct labor Overhead Selling expenses Administrative expenses Total costs and expenses Net income 600,000 1,200,000 300,000 450,000 771,000 3,321,000 $1,179,000 ces The company has an opportunity to sell 30,000 additional units at $12 per unit. The additional sales would not affect its current expected...
Farrow Co. expects to sell 500,000 units of its product in the next period with the following results $7,500,000 Sales (500,000 units) Costs and expenses Direct materials Direct labor Overhead Selling expenses Administrative expenses Total costs and expenses Net income 1,000,000 2,000,000 500,000 750,000 1,285,000 5,535,eee $1,965,000 The company has an opportunity to sell 50.000 additional units at $13 per unit. The additional sales would not affect its current expected sales. Direct materials and labor costs per unit would be...
Farrow Co. expects to sell 500,000 units of its product in the next period with the following results. Sales (500,000 units) Costs and expenses 7,500,000 Direct materials Direct labor Overhead Selling expenses Administrative expenses 1,000,000 2,000,000 500,000 750,000 Total costs and expenses Net income $1,965,000 The company has an opportunity to sell 50,000 additional units at $12 per unit. The additional sales would not affect its current expected sales. Direct materials and labor costs per unit would be the same...
Farrow Co. expects to sell 500,000 units of its product in the next period with the following results Sales (500,000 units) Costs and expenses $7,500,000 Direct materials Direct labor Overhead Selling expenses Administrative expenses 1,000,e0e 2,000,000 500,000 750,000 1,285,000 5,535,000 $1,965,000 Total costs and expenses Net income The company has an opportunity to sell 50,000 additional units at $13 per unit. The additional sales would not affect its current expected sales. Direct materials and labor costs per unit would be...
Farrow Co. expects to sell 300,000 units of its product in the next period with the following results. $4,500,000 Sales (300,000 units) Costs and expenses Direct materials Direct labor Overhead Selling expenses Administrative expenses Total costs and expenses Net income 600,000 1,200,000 300,000 450,000 771,000 3,321,000 $1,179,000 The company has an opportunity to sell 30,000 additional units at $12 per unit. The additional sales would not affect its current expected sales. Direct materials and labor costs per unit would be...
Farrow Co. expects to sell 300,000 units of its product in the next period with the following results Sales (300,000 units) Costs and expenses $4,500,000 Direct materials Direct labor Overhead Selling expenses Administrative expenses 600,000 1,200,000 300,000 450,000 771,000 3,321,000 $1,179,000 Total costs and expenses Net income The company has an opportunity to sell 30,000 additional units at $13 per unit. The additional sales would not affect its current expected sales. Direct materials and labor costs per unit would be...
Farrow Co. expects to sell 300,000 units of its product in the
next period with the following results.
Sales (300,000 units)
$
4,500,000
Costs and expenses
Direct materials
600,000
Direct labor
1,200,000
Overhead
300,000
Selling expenses
450,000
Administrative expenses
771,000
Total costs and expenses
3,321,000
Net income
$
1,179,000
The company has an opportunity to sell 30,000 additional units at
$12 per unit. The additional sales would not affect its current
expected sales. Direct materials and labor costs per...
Farrow Co. expects to sell 300,000 units of its product in the next period with the following results $4,500,000 Sales (300,000 units) Costs and expenses Direct materials Direct labor Overhead Selling expenses Administrative expenses Total costs and expenses Net Income 600.000 1.200,00 300.000 450,000 771.000 3,321,000 $1,179, eee The company has an opportunity to sell 30,000 additional units at $13 per unit. The additional sales would not affect its current expected sales. Direct materials and labor costs per unit would...
Farrow Co. expects to sell 400,000 units of its product in the next period with the following results Sales (400,000 units) Costs and expenses $6,000,000 Direct materials Direct labor Overhead Selling expenses Administrative expenses 800,000 1,600,000 400,000 600,000 1,028,000 4,428,000 $1,572,000 Total costs and expenses Net income The company has an opportunity to sell 40,000 additional units at $12 per unit. The additional sales would not affect its current expected sales. Direct materials and labor costs per unit would be...
Exercise 25-17 Accept new business or not LO A1 Farrow Co. expects to sell 300,000 units of its product in the next period with the Direct labor 458,000 expenses would increase by $129,000. to sell 30,000 additional units at $13 per unit. The additional sales expected sales. Direct materials and labor costs per unit would be the same for the expenses would increase by $129,000