Finch Quilting Company makes blankets that it markets through a variety of department stores. It makes the blankets in b...
Finch Quilting Company makes blankets that it markets through a variety of department stores. It makes the blankets in batches of 1,000 units. Finch made 26,000 blankets during the prior accounting period. The cost of producing the blankets is summarized here.
| Materials cost ($24 per unit × 26,000) | $ | 624,000 | |
| Labor cost ($19 per unit × 26,000) | 494,000 | ||
| Manufacturing supplies ($2 × 26,000) | 52,000 | ||
| Batch-level costs (26 batches at $8,000 per batch) | 208,000 | ||
| Product-level costs | 280,000 | ||
| Facility-level costs | 310,000 | ||
| Total costs | $ | 1,968,000 | |
| Cost per unit = $1,968,000 ÷ 26,000 = $75.69 | |||
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Sunny Motels has offered to buy a batch of 400 blankets for $60 each. Finch’s normal selling price is $96 per unit. Calculate the relevant cost per unit for the special order. Based on the preceding quantitative data, should Finch accept the special order?
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Sunny offered to buy a batch of 1,000 blankets for $60 per unit, calculate the relevant cost per unit for the special order. Should Finch accept the special order?
|
Homework Answers
| Finch Quilting Company | |||||
| Note :- Product level costs and facility level costs are irrelevant here as they do not change | |||||
| in accordance with the number of units produced. | |||||
| Part a - 1 | |||||
| Revenue ( 400 * 60 ) | 24000 | ||||
| Less:- | |||||
| Material cost ( 400 * 24 ) | 9600 | ||||
| Labor ( 400 * 19 ) | 7600 | ||||
| Supplies ( 400 * 2 ) | 800 | ||||
| Batch level cost ( 8000 * 1 ) | 8000 | 26000 | |||
| Net Income | -2000 | ||||
| Relevant costs are :- | |||||
| Material cost ( 400 * 24 ) | 9600 | ||||
| Labor ( 400 * 19 ) | 7600 | ||||
| Supplies ( 400 * 2 ) | 800 | ||||
| Batch level cost ( 8000 * 1 ) | 8000 | ||||
| Total costs | 26000 | ||||
| units | 400 | ||||
| Relevat cost per unit | 65 | ||||
| The order should not be accepted | |||||
| Part b - 1 | |||||
| Revenue ( 1000 * 60 ) | 60000 | ||||
| Less:- | |||||
| Material cost ( 1000 * 24 ) | 24000 | ||||
| Labor ( 1000 * 19 ) | 19000 | ||||
| Supplies ( 1000 * 2 ) | 2000 | ||||
| Batch level cost ( 8000 * 1 ) | 8000 | 53000 | |||
| Net Income | 7000 | ||||
| Relevant costs are :- | |||||
| Material cost ( 1000 * 24 ) | 24000 | ||||
| Labor ( 1000 * 19 ) | 19000 | ||||
| Supplies ( 1000 * 2 ) | 2000 | ||||
| Batch level cost ( 8000 * 1 ) | 8000 | ||||
| Total costs | 53000 | ||||
| units | 1000 | ||||
| Relevat cost per unit | 53 | ||||
| The order should be accepted | |||||
Add Answer to:
Finch Quilting Company makes blankets that it markets through a variety of department stores. It makes the blankets in b...
Finch Quilting Company makes blankets that it markets through a variety of department stores. It makes...
Finch Quilting Company makes blankets that it markets through a
variety of department stores. It makes the blankets in batches of
1,000 units. Finch made 26,000 blankets during the prior accounting
period. The cost of producing the blankets is summarized
here.
Sunny Motels has offered to buy a batch of 400 blankets for $60
each. Finch’s normal selling price is $96 per unit. Calculate the
relevant cost per unit for the special order. Based on the
preceding quantitative data, should...
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Finch Quilting Company makes blankets that it markets through a
variety of department stores. It makes the blankets in batches of
1,000 units. Finch made 26,000 blankets during the prior accounting
period. The cost of producing the blankets is summarized
here.
Sunny Motels has offered to buy a batch of 400 blankets for $60
each. Finch’s normal selling price is $96 per unit. Calculate the
relevant cost per unit for the special order. Based on the
preceding quantitative data, should...
Baird Quilting Company makes blankets that it markets through a variety of department stores. It makes the blankets in batches of 1,000 units. Baird made 26,000 blankets during the prior accounting period. The cost of producing the blankets is summarized here. Materials cost ($27 per unit x 26,000) Labor cost ($21 per unit x 26,000) Manufacturing supplies ($2 * 26,000) Batch-level costs (26 batches at $4,000 per batch) Product-level costs Facility-level costs Total costs Cost per unit - $1,914,000 +...
Baird Quilting Company makes blankets that it markets through a variety of department stores. It makes the blankets in batches of 1,000 units. Baird made 26,000 blankets during the prior accounting period. The cost of producing the blankets is summarized here. Materials cost ($27 per unit x 26,000) Labor cost ($21 per unit x 26,000) Manufacturing supplies ($2 x 26,000) Batch-level costs (26 batches at $4,000 per batch) Product-level costs Facility-level costs Total costs Cost per unit = $1,914,000 +...
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