Homework Answers
Solution:
First of all we need to find out Unit Price for direct labor and material
|
Normal Volume |
$ per unit (Total Value / 300,000 Units) |
|
|
Direct materials |
$600,000 |
$2.00 |
|
Direct labor |
$1,200,000 |
$4.00 |
Statement of Evaluation of additional Volume
|
Normal Volume (300,000 Units) |
Additional Volume (30,000 Units) |
Combined Total |
|
|
Sales |
$4,500,000 |
$390,000 |
$4,890,000 |
|
Costs and expenses |
|||
|
Direct materials |
$600,000 |
$60,000 (30,000*$2) |
$660,000 |
|
Direct labor |
$1,200,000 |
$120,000 ($30,000*4) |
$1,320,000 |
|
Overhead |
$300,000 |
$48,000 ($300,000*16%) |
$348,000 |
|
Selling Expenses |
$450,000 |
$0 |
$450,000 |
|
Administrative Expenses |
$771,000 |
$129,000 |
$900,000 |
|
Total costs and expenses |
$3,321,000 |
$357,000 |
$3,678,000 |
|
Incremental Income (loss) from New Business |
$33,000 ($390,000 - $357,000) |
The company should accept the offer.
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Exercise 25-17 Accept new business or not LO A1 Farrow Co. expects to sell 300,000 units...
Exercise 23-2 Accept new business or not LO A1 Farrow Co. expects to sell 300,000 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...
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 500,000 units of Its product In the next period with the following results. Sales (50e.eee units) Costs and expenses $7,580,000 1.800.e0e Direct labor 2.880.000 Overhead 58e.8ee 758,88e e ng expenses penses 5.535.888 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 materlals and...
Farrow Co. expects to sell 300,000 units of its product in the next period with the...
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...
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...
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...
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 500,000 units of its product in the next period with the...
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 400,000 units of its product in the next period with the...
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...
Farrow Co. expects to sell 500,000 units of its product in the next period with the...
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 500,000 units of its product in the next period with the...
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...
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...
Exercise 23-2 Accept new business or not LO A1 Farrow Co. expects to sell 500,000 units of Its product In the next period with the following results. Sales (50e.eee units) Costs and expenses $7,580,000 1.800.e0e Direct labor 2.880.000 Overhead 58e.8ee 758,88e e ng expenses penses 5.535.888 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 materlals and...
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 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 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...
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 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...
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