Question

13. Muddin' Associates had the following results of operations for the last fiscal year: Sales (12,000 units @ $9.00) $ 108,000 Materials and direct labor Overhead (30% variable) (2,800) Selling & Administrative expenses (all fixed) (5,700) Operating Income $ 21,500 (78,000) A foreign company (whose sales will not affect Muddin' Associates' regular sales) offers to purchase 3,500 units at $7.00 per unit. There would be tariff charges of $350 on these units. Prepare an analysis to determine if Muddin' Associates take this order if they have the capacity available to make the extra units and what your recommendation would be (accept or reject the additional business). Muddin' Associates Accept Special Order? April 25, 2019 RECOMMENDATION:

Answer 1

A Porticulars Sop pu (-) D. Mat & labour (1 (-) V. OIH (N12) Amount (8 700 (6.50) (0.67) 0.43 Profit pu Total Profit= 350080.43 = $1,505 Conclusion : Accept the order - Nole material and labour cost u for 12000 units = $78,000 Tunika 78000 12000 $6.50 | Total Overhead Voriable OlH = = $28.00 2800 X 30% $840 = vi Ollt pu = $0.07 840 12,000

6 SP pu (8) vc pu ($) Stick 9.00 6.50 Mallet 22.00 Hammer 29.00 15.00 ( 2.50 11.00 14.00 contribution margin ($ (aan Machine hour pu (hovu) 0.50 2.00 2.5 @ Conta per machine (8) hour (cid) 5.00 5.50 5.60 Order of - ranking production 3rd and ist Demand limit (units) 2500 2500 2500 read 1,250 5,000 6,250 1. (b) Il Machine hours (gxd) 1 Qty to be produced ured 750 250 5,000 6250 || * (12000 - 6250 - 5000)