8. Montoya Enterprises produces a sword that sells for $200. Although the company's production capacity is 3,000 swords per year, only 2,500 swords are currently being produced and sold. Humperdinck Corporation has offered to purchase 500 swords as a one-time special purchase at a price of $160 per sword. If the special order is accepted, Montoya Enterprises will have to incur additional fixed costs of $2,000. At Montoya's current level of production (2,500 swords), the Montoya Enterprises incurs the following costs: Direct materials $200,000 $100,000 $ 50,000 $ 85,000 Direct labor Variable factory overhead Fixed factory overhead What will be the impact on Montoya's Enterprises' income if the special order is accepted?

Radar Company sells bikes for $500 each. The company currently sells 4,150 bikes per year and could make as many as 4,510 bikes per year. The bikes cost $300 each to make: $180 in variable costs per bike and $120 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 360 bikes for $460 each. Incremental fixed costs to make this order are $70 per bike. No other costs will change if this order is accepted. (a) Compute the income for the special offer. (b) Should Radar accept this offer? (a) Special offer analysis Sales Variable costs Contribution margin Income (b) The company should $ Per Unit Total 460 $ 165,600 180 0

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Radar Company sells bikes for $520 each. The company currently sells 4,350 bikes per year and could make as many as 4,690 bikes per year. The bikes cost $270 each to make: $160 in variable costs per bike and $110 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 340 bikes for $500 each. Incremental fixed costs to make this order are $70 per bike. No other costs will change if this order is accepted. (a) Compute the income for the special offer. (b) Should Radar accept this offer? (a) Special offer analysis Contribution margin Income: (b) The company should Per Unit 0 Total

Waterway Inc. manufactures snowsuits. Waterway is considering purchasing a new sewing machine at a cost of $2.45 million. Its existing machine was purchased five years ago at a price of $1.8 million; six months ago, Waterway spent $55,000 to keep it operational. The existing sewing machine can be sold today for $243,257. The new sewing machine would require a one-time, $85,000 training cost. Operating costs would decrease by the following amounts for years 1 to 7: Year 1 $390,900 2 399,900 3 410,400 4 425,200 5 432,600 435,300 7 437,700 The new sewing machine would be depreciated according to the declining-balance method at a rate of 20%. The salvage value is expected to be $379,700. This new equipment would require maintenance costs of $98,400 at the end of the fifth year. The cost of capital is 9%. Click here to view PV table. Use the net present value method to determine the following: (If net present value is negative then enter with negative sign preceding the number e.g. -45 or…

Radar Company sells bikes for $490 each. The company currently sells 4,150 bikes per year and could make as many as 4,490 bikes per year. The bikes cost $300 each to make: $175 in variable costs per bike and $125 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 340 bikes for $470 each. Incremental fixed costs to make this order are $60 per bike. No other costs will change if this order is accepted. (a) Compute the income for the special offer. (b) Should Radar accept this offer? (a) Special offer analysis Per Unit Total Contribution margin Income (b) The company should