The following is an example why a company should not reject a special order? a. The...
The following is an example why a company should not reject a special order?
| a. |
The special order is from a local country and will affect normal cost structure. |
|
| b. |
The special order will cover all fixed costs. |
|
| c. |
The special order is from outside normal sales area and will not affect normal sales. |
Homework Answers
Correct Option c.
The special order is from outside normal sales area and will not affect normal sales.
Reason: A special order which affects the normal sales area and normal customer base should be rejected.
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The following is an example why a company should not reject a
special order?
a.
The...
1. What is the expected level of profit? 2. Should the company accept a special order...
1. What is the expected level of profit?
2. Should the company accept a special order for 1,000 units at a
selling price of ₹ 1,000 if variable marketing expenses associated
with the special order are ₹ 100 per unit? What will be the
incremental profit if the order is accepted?
3. Suppose that the company received a special order for 3,000
units at a selling price of ₹ 450, with no variable marketing
expenses. What would be the impact...
a. Present an analysis supporting a decision to accept or reject the special order. (Round computations to the nearest cent.)
Total cost data follow for Glendale Manufacturing Company, which has a normal capacity per period of 8,000 units of product that sell for $60 each. For the foreseeable future, regular sales volume should continue to equal normal capacity.Direct material$102,400Direct labor64,000Variable manufacturing overhead48,400Fixed manufacturing overhead (Note 1)38,400Selling expense (Note 2)35,200Administrative expense (fixed)15,000$303,400Notes:1. Beyond normal capacity, fixed overhead costs increase $1,800 for each 500 units or fraction thereof until a maximum capacity of 10,000 units is reached.2. Selling expenses consist of a...
kh. For the forestable future regular sales volume should Special Order Total cost data follow for...
kh. For the forestable future regular sales volume should Special Order Total cost data follow for Glendale Manufacturing Company, which has a normal capacity per period of 8,000 continue to equal normal capacity 599,200 Direct labor 60,800 Variable manufacturing overhead Feed manufacturing overhead Note 11 Seing expense Note: Administrative perver 15.000 5293,800 Notes 1. Beyond normal capacity, fixed overhead costs increase $1,800 for each 500 units or fraction thereof until a maximum capacity of 10,000 units is reached 2. Selling...
14. A company is within plant capacity. It is contemplating whether a special order should be...
14. A company is within plant capacity. It is contemplating whether a special order should be accepted. The order will not impact regular sales. If the company accepts the special order, what will occur? A) Incremental costs will not be affected. B) Net Income will increase if the special sales price per unit exceeds the unit variable costs. C) There are no incremental revenues. D) Both fixed and variable costs will increase. 15. A major accounting contribution to the managerial...
Special Order Total cost data follow for Glendale Manufacturing Company, which has a normal capacity per...
Special Order Total cost data follow for Glendale Manufacturing Company, which has a normal capacity per period of 8,000 units of product that sell for $60 each. regular sales volume should continue to equal normal capacity. Direct material $102,400 Direct labor 64,000 Rectangular Snip Variable manufacturing overhead 48,400 Fixed manufacturing overhead (Note 1) 38,400 Selling expense (Note 2) 35,200 Administrative expense (fixed) 15,000 $303,400 Notes: 1. Beyond normal capacity, fixed overhead costs increase $1,800 for each 500 units or fraction...
The following assumptions are used in the decision to reject/not reject a special order? a. The...
The following assumptions are used in the decision to reject/not reject a special order? a. The qualitative issues related to special order. b. The quantitative issues related to special order. c. Both qualitative and quantitative issues related to special order.
a) Exercise 1: What is the Contribution to Profit for the Special Order Decision? And, should...
a) Exercise 1: What is the Contribution to Profit for
the Special Order Decision? And, should Deco accept the offer. Yes
or No? See circles on the printed exercise. A complete
answer will include both a dollar amount and Yes or
No.
EXERCISE 1: Deco Art Company. produces decorative picture frames. A recent analysis of fixed and variable costs per unit is as follows Deco Art currently sells each frame for a price of $4.50 each. Wheeler Company has offered...
Special Order Total cost data follow for Glendale Manufacturing Company, which has a normal capacity per...
Special Order Total cost data follow for Glendale Manufacturing Company, which has a normal capacity per period of 8,000 units of product that sell for $60 each. For the foreseeable future, regular sales volume should continue to equal normal capacity. Direct material $100,800 Direct labor 62,400 Variable manufacturing overhead 46,800 Fixed manufacturing overhead (Note 1) 38,400 Selling expense (Note 2) 35,200 Administrative expense (fixed) 15,000 $298,600 Notes: 1. Beyond normal capacity, fixed overhead costs increase $1,800 for each 500 units...
Structuring a Special-Order Problem Harrison Ford Company has been approached by a new customer with an...
Structuring a Special-Order Problem Harrison Ford Company has been approached by a new customer with an offer to purchase 10,000 units of its model IJ5 at a price of $4.00 each. The new customer is geographically separated from the company's other customers, and existing sales would not be affected. Harrison normally produces 75,000 units of IJ5 per year but only plans to produce and sell 60,000 in the coming year. The normal sales price is $12 per unit. Unit cost...
Structuring a Special-Order Problem Harrison Ford Company has been approached by a new customer with an...
Structuring a Special-Order Problem Harrison Ford Company has been approached by a new customer with an offer to purchase 10,000 units of its model IJ5 at a price of $5 each. The new customer is geographically separated from the company's other customers, and existing sales would not be affected. Harrison normally produces 75,000 units of IJ5 per year but only plans to produce and sell 60,000 in the coming year. The normal sales price is $12 per unit. Unit cost...
1. What is the expected level of profit?
2. Should the company accept a special order for 1,000 units at a
selling price of ₹ 1,000 if variable marketing expenses associated
with the special order are ₹ 100 per unit? What will be the
incremental profit if the order is accepted?
3. Suppose that the company received a special order for 3,000
units at a selling price of ₹ 450, with no variable marketing
expenses. What would be the impact...
kh. For the forestable future regular sales volume should Special Order Total cost data follow for Glendale Manufacturing Company, which has a normal capacity per period of 8,000 continue to equal normal capacity 599,200 Direct labor 60,800 Variable manufacturing overhead Feed manufacturing overhead Note 11 Seing expense Note: Administrative perver 15.000 5293,800 Notes 1. Beyond normal capacity, fixed overhead costs increase $1,800 for each 500 units or fraction thereof until a maximum capacity of 10,000 units is reached 2. Selling...
14. A company is within plant capacity. It is contemplating whether a special order should be accepted. The order will not impact regular sales. If the company accepts the special order, what will occur? A) Incremental costs will not be affected. B) Net Income will increase if the special sales price per unit exceeds the unit variable costs. C) There are no incremental revenues. D) Both fixed and variable costs will increase. 15. A major accounting contribution to the managerial...
Special Order Total cost data follow for Glendale Manufacturing Company, which has a normal capacity per period of 8,000 units of product that sell for $60 each. regular sales volume should continue to equal normal capacity. Direct material $102,400 Direct labor 64,000 Rectangular Snip Variable manufacturing overhead 48,400 Fixed manufacturing overhead (Note 1) 38,400 Selling expense (Note 2) 35,200 Administrative expense (fixed) 15,000 $303,400 Notes: 1. Beyond normal capacity, fixed overhead costs increase $1,800 for each 500 units or fraction...
a) Exercise 1: What is the Contribution to Profit for
the Special Order Decision? And, should Deco accept the offer. Yes
or No? See circles on the printed exercise. A complete
answer will include both a dollar amount and Yes or
No.
EXERCISE 1: Deco Art Company. produces decorative picture frames. A recent analysis of fixed and variable costs per unit is as follows Deco Art currently sells each frame for a price of $4.50 each. Wheeler Company has offered...
Special Order Total cost data follow for Glendale Manufacturing Company, which has a normal capacity per period of 8,000 units of product that sell for $60 each. For the foreseeable future, regular sales volume should continue to equal normal capacity. Direct material $100,800 Direct labor 62,400 Variable manufacturing overhead 46,800 Fixed manufacturing overhead (Note 1) 38,400 Selling expense (Note 2) 35,200 Administrative expense (fixed) 15,000 $298,600 Notes: 1. Beyond normal capacity, fixed overhead costs increase $1,800 for each 500 units...
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