Requirement 1: Compute net increase in profits as follows
Particulars | Price / Cost | × | Units | = | Amount |
Sales Revenue ($47 × (1 − 16%)) (a) | $39.48 | × | 8,000 | = | $315,840 |
Deduct: Costs | |||||
Direct Material | $20.00 | × | 8,000 | = | $160,000 |
Direct Labor | $6.00 | × | 8,000 | = | $48,000 |
Variable Manufacturing Overhead | $3.00 | × | 8,000 | = | $24,000 |
Variable Selling Expense ($2 × (1 − 75%)) | $0.50 | × | 8,000 | = | $4,000 |
Special Machine ($16,000 ÷ 8,000 units) | $2.00 | × | 8,000 | = | $16,000 |
Total Costs (b) | $31.50 | $252,000 | |||
Net Increase in Profits (a) − (b) | $7.98 | $63,840 |
Requirement 2: Compute net increase in profits as follows
Particulars | Cost | × | Units | = | Amount |
Costs Reimbursed | |||||
Direct Material | $20.00 | × | 8,000 | = | $160,000 |
Direct Labor | $6.00 | × | 8,000 | = | $48,000 |
Variable Manufacturing Overhead | $3.00 | × | 8,000 | = | $24,000 |
Fixed Manufacturing Overhead | $5.00 | × | 8,000 | = | $40,000 |
Fixed Fee | $2.00 | × | 8,000 | = | $16,000 |
Total Revenue (c) | $36.00 | $288,000 | |||
Deduct: Incremental Costs | |||||
Direct Material | $20.00 | × | 8,000 | = | $160,000 |
Direct Labor | $6.00 | × | 8,000 | = | $48,000 |
Variable Manufacturing Overhead | $3.00 | × | 8,000 | = | $24,000 |
Total incremental costs (d) | $29.00 | $232,000 | |||
Net Increase in Profits (c) − (d) | $7.00 | $56,000 |
Requirement 3: Compute net increase or decrease in profits as follows
Particulars | Price / Cost | × | Units | = | Amount |
Sales Revenue | |||||
U.S Army | $36.00 | × | 8,000 | = | $288,000 |
Deduct: Regular Channels | $47.00 | × | 8,000 | = | $376,000 |
Decrease in Revenue | ($88,000) | ||||
Deduct: Variable Selling Expenses avoided | $2.00 | × | 8,000 | = | $16,000 |
Net decrease in profits if the order from Army accepted | ($72,000) |
Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce an...
Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 46,000 Rets per year. Costs associated with this level of production and sales are given below: Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 46,000 Rets per year. Costs associated with this level of production and sales are given below: Unit $ 25 Direct materials Direct labor Variable...
Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 46,000 Rets per year. Costs associated with this level of production and sales are given below: Unit Total Direct materials $ 20 $ 920,000 Direct labor 6 276,000 Variable manufacturing overhead 3 138,000 Fixed manufacturing overhead 9 414,000 Variable selling expense 4 184,000 Fixed selling expense 6 276,000 Total cost $ 48 $ 2,208,000 The Rets normally sell for $53...
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 $ 25 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense Total cost ON VW Total $ 950,000 228,000 114,000 266,000 76,000 228,000 $1,862,000 $ 49 The Rets normally sell for $54 each. Fixed manufacturing overhead...
Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 46,000 Rets per year. Costs associated with this level of production and sales are given below: Unit Total Direct materials $ 25 $ 1,150,000 Direct labor 10 460,000 Variable manufacturing overhead 3 138,000 Fixed manufacturing overhead 5 230,000 Variable selling expense 2 92,000 Fixed selling expense 6 276,000 Total cost $ 51 $ 2,346,000 The Rets normally sell for $56...
Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 50,000 Rets per year. Costs associated with this level of production and sales are given below. Unit $15 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense Total cost Total $ 750,000 400,000 150.000 350,000 200,000 300,000 $ 2,150,000 The Rets normally sell for $48 each. Fixed manufacturing overhead is $350,000 per year...
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 $ 20 $ 760,000 Direct labor 10 380,000 Variable manufacturing overhead 3 114,000 Fixed manufacturing overhead 7 266,000 Variable selling expense 2 76,000 Fixed selling expense 6 228,000 Total cost $ 48 $ 1,824,000 The Rets normally sell for $53...
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 $ 20 6 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense Total cost Total $ 680,000 204,000 102,000 238,000 136,000 204,000 $ 1,564,000 The Rets normally sell for $51 each. Fixed manufacturing overhead is $238,000...
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 ما علما أ Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense Total cost Total $ 850,000 340,000 102,000 238,000 68,000 204,000 $ 1,802,000 ن ا ا The Rets normally sell for $58 each. Fixed manufacturing...
Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 44,000 Rets per year. Costs associated with this level of production and sales are given below: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense Total cost Unit $ 20 10 3 7 2 6 $ 48 Total $ 880,000 440,000 132,000 308,000 88,000 264,000 $ 2,112,000 The Rets normally sell for $53...
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 $ 20 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense Total cost Now Total 800,000 400,000 120,000 360,000 160,000 240,000 $ 2,980,000 The Rets normally sell for $57 each. Fixed manufacturing overhead is $360,000 per...