What is the correct answer to question 1 and 2? Suppose in the preceding question, allinformation is the same except that thepresent sale volume to regularcustomers is 4,000 liters. Should ZCompany still accept the special order?OOOYes, because operating income wouldincrease by P45,000.00.Yes, because operating income wouldincrease by P9,000.00No, because operating income woulddecrease by P4,000.00No, because operating income would be thesame. Z Company sells product called resin. Itreceived a special order for 1,500 litersof resin from A, a valued client of ZCompany. A asked for a 40% off of theregular selling price of P50.00 per liter.Pertinent data about the product resinare as follows:Normal plant capacitylitersPresent sales volume tocustomers 3,500 litersProduction costsMaterialsLaborFactory overheadvariablefixedOP6,000.00 profitP6,000.00 loss5,000The special order will not requireadditional selling and administrativecosts and the same will not affectregular sales.P9,000.00 profitP15.00 per literP5.00 per literQuestion: Should Z Company accept thespecial order, how much would be theincremental profit using differentialanalysis?P9,000.00 lossP4.00 per literP9,250.00

INCREMENTAL ANALYSIS incremental analysis is one of the important Marginal Costing techniques.…

Suppose in the preceding question, all information is the same except that the present sale volume to regular customers is 4,000 liters. Should Z Company still accept the special order? O O Yes, because operating income would increase by P45,000.00. Yes, because operating income would increase by P9,000.00 No, because operating income would decrease by P4,000.00 No, because operating income would be the same.

Suppose in the preceding question, all information is the same except that the present sale volume to regular customers is 4,000 liters. Should Z Company still accept the special order? O O Yes, because operating income would increase by P45,000.00. Yes, because operating income would increase by P9,000.00 No, because operating income would decrease by P4,000.00 No, because operating income would be the same.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 1PA: The following product Costs are available for Haworth Company on the production of chairs: direct...

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A customer has asked Lalka Corporation to supply 4,500 units of product H60, with some modifications, for $42.70 each. The normal selling price of this product is $49.35 each. The normal unit product cost of product H60 is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $ 16.20 2.80 10.00 9,40 $ 38.40 Direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like some modifications made to product H60 that would increase the variable costs by $5.30 per unit and that would require a one-time investment of $24,750 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. Required: Determine the financial advantage or disadvantage of accepting the special order.
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/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress-false McCallen Company expects to produce and sell 500 units in the next month. The data on costs are as follows: Per-unit costs: Selling price $8.00 Variable manufacturing costs 2.75 Variable selling costs 0.25 Total costs: Fixed manufacturing costs $1,000 Fixed selling costs 125 Required: A. What is the variable cost per unit? B. What is the contribution margin per unit? C. What is the variable cost ratio? Round your answer to one decimal place. % D. What is the contribution margin ratio? Round your answer to one decimal place.