Current Designs faces a number of important dedsions that require incremental analysis. Recently, Mike Cichanowski, owner and CEO of Current Designs, received a phone call from the president of a brewing company. He was calling to inquire about the possibility of Current Designs producing "floating coolers" for a promotion his company was planning These coolers resemble kayaks but are about one-third the size. They are used to float food and beverages while paddling down the river on a weekend leisure trip. The company would be interested in purchasing 100 coolers for the upcoming summer. It is willing to pay $250 per cooler. The brewing company would pick up the coolers upon completion of the order Mike met with Diane Buswell, controller, to identify how much it would cost Current Designs to produce the coolers. After careful analysis, the following costs were identified. Direct materials $80 /unit Direct labor $60 /unit Variable overhead $20 /unit Current Designs would be able to modify an existing mold to produce the coolers. The cost of these modifications would be approximately $3,000. Current Designs has sufficient capacity to produce the special order without impacting current operations. (a) Prepare an incremental analysis to determine whether Current Designs should accept this special order to produce the coolers (Enter decrease in net income then enter with a negative sign preceding the number or parenthesis, eg. -15,000 or (15,000)) Reject Order Revenues $ Costs Net Income $ $ Accept Order Net Income Increase (Decrease) S Current Designs should the order based on the incremental analysis. $
Current Designs faces a number of important dedsions that require incremental analysis. Recently, Mike Cichanowski, owner and CEO of Current Designs, received a phone call from the president of a brewing company. He was calling to inquire about the possibility of Current Designs producing "floating coolers" for a promotion his company was planning These coolers resemble kayaks but are about one-third the size. They are used to float food and beverages while paddling down the river on a weekend leisure trip. The company would be interested in purchasing 100 coolers for the upcoming summer. It is willing to pay $250 per cooler. The brewing company would pick up the coolers upon completion of the order Mike met with Diane Buswell, controller, to identify how much it would cost Current Designs to produce the coolers. After careful analysis, the following costs were identified. Direct materials $80 /unit Direct labor $60 /unit Variable overhead $20 /unit Current Designs would be able to modify an existing mold to produce the coolers. The cost of these modifications would be approximately $3,000. Current Designs has sufficient capacity to produce the special order without impacting current operations. (a) Prepare an incremental analysis to determine whether Current Designs should accept this special order to produce the coolers (Enter decrease in net income then enter with a negative sign preceding the number or parenthesis, eg. -15,000 or (15,000)) Reject Order Revenues $ Costs Net Income $ $ Accept Order Net Income Increase (Decrease) S Current Designs should the order based on the incremental analysis. $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
None
Transcribed Image Text:Current Designs faces a number of important dedsions that require incremental analysis.
Recently, Mike Cichanowski, owner and CEO of Current Designs, received a phone call from the president of a brewing company. He
was calling to inquire about the possibility of Current Designs producing "floating coolers" for a promotion his company was planning
These coolers resemble kayaks but are about one-third the size. They are used to float food and beverages while paddling down the
river on a weekend leisure trip. The company would be interested in purchasing 100 coolers for the upcoming summer. It is willing to
pay $250 per cooler. The brewing company would pick up the coolers upon completion of the order
Mike met with Diane Buswell, controller, to identify how much it would cost Current Designs to produce the coolers. After careful
analysis, the following costs were identified.
Direct materials
$80 /unit
Direct labor
$60 /unit
Variable overhead $20 /unit
Current Designs would be able to modify an existing mold to produce the coolers. The cost of these modifications would be
approximately $3,000. Current Designs has sufficient capacity to produce the special order without impacting current operations.
(a)
Prepare an incremental analysis to determine whether Current Designs should accept this special order to produce the coolers (Enter
decrease in net income then enter with a negative sign preceding the number or parenthesis, eg. -15,000 or (15,000))
Reject Order
Revenues
$
Costs
Net Income
$
$
Accept Order
Net Income
Increase (Decrease)
S
Current Designs should
the order based on the incremental analysis.
$
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education