A customer has requested that Lewelling Corporation fill a special order for 2,900 units of product S47 for $31 a unit. The normal selling price of the product is $30.40 a unit. While the product would be modified slightly for the special order, product S47's normal unit product cost is $19.00: Direct materials. Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $ 5.30 4.00 2.40 7.30 $19.00 Assume that 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 modifications made to product S47 that would increase the variable costs by $1.20 per unit and that would require an investment of $15,000.00 in special molds that would have no salvage value. Due to capacity constaints, this special order would result in a loss of regular sales of 725 units. The annual financial advantage (disadvantage) for the company as a result of accepting this special order should be:

A customer has requested that Lewelling Corporation fill a special order for 2,900 units of product S47 for $31 a unit. The normal selling price of the product is $30.40 a unit. While the product would be modified slightly for the special order, product S47's normal unit product cost is $19.00: Direct materials. Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $ 5.30 4.00 2.40 7.30 $19.00 Assume that 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 modifications made to product S47 that would increase the variable costs by $1.20 per unit and that would require an investment of $15,000.00 in special molds that would have no salvage value. Due to capacity constaints, this special order would result in a loss of regular sales of 725 units. The annual financial advantage (disadvantage) for the company as a result of accepting this special order should be:

Name: A customer has requested that Lewelling Corporation fill a special or
Uploaded: 2024-03-20T06:32:49.000Z
Channel: Bartleby
Description: A customer has requested that Lewelling Corporation fill a special order for 2,900 units of product S47 for $31 a unit. The normal selling price of theproduct is $30.40 a unit. While the product would be modified slightly for the special order, prod

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 2PB: The following product costs are available for Kellee Company on the production of eyeglass frames:...

See similar textbooks

Similar questions

The following product costs are available for Stellis Company on the production of erasers: direct materials, $22,000; direct labor, $35,000; manufacturing overhead, $17,500; selling expenses, $17,600; and administrative expenses; $13,400. What are the prime costs? What are the conversion costs? What is the total product cost? What is the total period cost? If 13,750 equivalent units are produced, what is the equivalent material cost per unit? If 17,500 equivalent units are produced, what is the equivalent conversion cost per unit?
The following product costs are available for Kellee Company on the production of eyeglass frames: direct materials, $32,125; direct labor, $23.50; manufacturing overhead, applied at 225% of direct labor cost; selling expenses, $22,225; and administrative expenses, $31,125. The direct labor hours worked for the month are 3,200 hours. A. What are the prime costs? B. What are the conversion costs? C. What is the total product cost? D. What is the total period cost? E. If 6.425 equivalent units are produced, what is the equivalent material cost per unit? F. What is the equivalent conversion cost per unit?
Brees, Inc., a manufacturer of golf carts, has just received an offer from a supplier to provide 2,600 units of a component used in its main product. The component is a track assembly that is currently produced internally. The supplier has offered to sell the track assembly for 66 per unit. Brees is currently using a traditional, unit-based costing system that assigns overhead to jobs on the basis of direct labor hours. The estimated traditional full cost of producing the track assembly is as follows: Prior to making a decision, the companys CEO commissioned a special study to see whether there would be any decrease in the fixed overhead costs. The results of the study revealed the following: 3 setups1,160 each (The setups would be avoided, and total spending could be reduced by 1,160 per setup.) One half-time inspector is needed. The company already uses part-time inspectors hired through a temporary employment agency. The yearly cost of the part-time inspectors for the track assembly operation is 12,300 and could be totally avoided if the part were purchased. Engineering work: 470 hours, 45/hour. (Although the work decreases by 470 hours, the engineer assigned to the track assembly line also spends time on other products, and there would be no reduction in his salary.) 75 fewer material moves at 30 per move. Required: 1. Ignore the special study, and determine whether the track assembly should be produced internally or purchased from the supplier. 2. Now, using the special study data, repeat the analysis. 3. Discuss the qualitative factors that would affect the decision, including strategic implications. 4. After reviewing the special study, the controller made the following remark: This study ignores the additional activity demands that purchasing would cause. For example, although the demand for inspecting the part on the production floor decreases, we may need to inspect the incoming parts in the receiving area. Will we actually save any inspection costs? Is the controller right?
Box Springs. Inc., makes two sizes of box springs: queen and king. The direct material for the queen is $35 per unit and $55 is used in direct labor, while the direct material for the king is $55 per unit, and the labor cost is $70 per unit. Box Springs estimates it will make 4,300 queens and 3,000 kings in the next year. It estimates the overhead for each cost pool and cost driver activities as follows: How much does each unit cost to manufacture?
Box Springs, Inc., makes two sizes of box springs: twin and double. The direct material for the twin is $25 per unit and $40 s used in direct labor, while the direct material for the double is $40 per unit, and the labor cost is $50 per unit. Box Springs estimates it will make 5,000 twins and 9,000 doubles in the next year. It estimates the overhead for each cost pool and cost driver activities as follows: How much does each unit cost to manufacture?
Wehrs Corporation has received a request for a special order of 9,900 units of product K19 for $47.40 each. The normal selling price of this product is $52.50 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product K19 is computed as follows: Direct materials. Direct labor Variable manufacturing overhead i Fixed manufacturing overhead Unit product cost $ 18.20 7.50 4.70 7.60 $38.00 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 K19 that would increase the variable costs by $7.10 per unit and that would require a one-time investment of $46,900 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 effect on the company's total net…
Wehes Corporation has received a request for a special order of 9.200 units of product K19 for $4610 each. The normal selling price of this product is $51.20 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product K19 is computed as follows Direct materials Direct Jabor Variable manufacturing overhead Fixed Manufacturing overhead 5 16.90 6.20 3.40 6.30 $32.00 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 K19 that would increase the variable costs by $5 80 per unit and that would require a one-time investment of $45,600 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 effect on the company's total net operating income of…
Wehrs Corporation has received a request for a special order of 9,800 units of product K19 for $47.50 each. The normal selling price of this product is $52.60 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product K19 is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product.cost $ 18.30 7.60 4.80 7.70 $ 38.40 Direct labor is a varlable 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 K19 that would increase the variable costs by $7.20 per unit and that would require a one-time investment of $47,000 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 effect on the company's total net…
A customer has requested that Lewelling Corporation fill a special order for 2,700 units of product S47 for $33 a unit. While the product would be modified slightly for the special order, product S47's normal unit product cost is $18.40: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $ 5.10 4.00 2.20 7.10 $ 18.40 Assume that 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 modifications made to product S47 that would increase the variable costs by $1.40 per unit and that would require an investment of $17,000 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. The annual financial advantage (disadvantage) for the company as a result of accepting this special order should be:
A customer has requested that Lewelling Corporation fill a special order for 2,700 units of product S47 for $33 a unit. While the product would be modified slightly for the special order, product S47's normal unit product cost is $18.40: $ 5.10 Direct materials Direct labor 4.00 Variable manufacturing overhead 2.20 Fixed manufacturing overhead 7.10 Unit product cost $ 18.40 Assume that 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 modifications made to product S47 that would increase the variable costs by $1.40 per unit and that would require an investment of $17,000 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. The annual financial advantage (disadvantage) for the company as a result of accepting this special order should be: Multiple…
A customer has requested that Lewelling Corporation fill a special order for 3,200 units of product S47 for $28 a unit. While the product would be modified slightly for the special order, product S47's normal unit product cost is $23.50: Direct materials $ 6.80 Direct labor 4.00 Variable manufacturing overhead 3.90 Fixed manufacturing overhead 8.80 Unit product cost $ 23.50 Assume that 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 modifications made to product S47 that would increase the variable costs by $2.40 per unit and that would require an investment of $12,000.00 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. The annual financial advantage (disadvantage) for the company as a result of…
Holly Corp. has received a request for a special order of 9,000 units of product Z74 for $46.50 each. The normal selling price of this product is $51.60 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product Z74 is computed as follows: Direct materials.. $17.30 Direct labor. 6.60 Variable manufacturing overhead... Fixed manufacturing overhead Unit product cost... 3.80 6.70 $34.40 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 Z74 that would increase the variable costs by $6.20 per unit and that would require a one-time investment of $46,000 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. Determine the effect on total net operating income of…