Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 96,000 units per year is: Direct materials Direct labor $ 1.50 $ 4.00 $ 0.70 Variable manufacturing overhead Fixed manufacturing overhead $ 4.65 Variable selling and administrative expense Fixed selling and administrative expense $ 2.00 $ 3.00 The normal selling price is $19.00 per unit. The company's capacity is 115,200 units per year. An order has been received from a mail-order house for 1,600 units at a special price of $16.00 per unit. This order would not affect regular sales or the company's total fixed costs. Required: 1.What would be the total financial impact of accepting the special order? (Indicate negative cash flows with a negative sign.) 2. As a separate matter from the special order, assume the company's inventory includes 1,000 units of this product that were produced last year and that are inferior to the current model. The units must be sold through regular channels at reduced prices. The company does not expect the selling of these inferior units to have any affect on the sales of its current model. What unit cost is relevant for establishing a minimum selling price for the inferior units? (In other words, what is the least they can charge for these units and not lose money?) Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the financial advantage (disadvantage) of accepting the special order? < Required 1 Required 2 > Required 1 Required 2 As a separate matter from the special order, assume the company's inventory includes 1,000 units of this product that were produced last year and that are inferior to the current model. The units must be sold through regular channels at reduced prices. The company does not expect the selling of these inferior units to have any affect on the sales of its current model. What unit cost is relevant for establishing a minimum selling price for the inferior units? (Round your answer to 2 decimal places.) Show less Relevant cost per unit

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's
normal activity level of 96,000 units per year is:
Direct materials
$ 1.50
$ 4.00
Direct labor
Variable manufacturing overhead
$ 0.70
Fixed manufacturing overhead
$4.65
Variable selling and administrative expense
Fixed selling and administrative expense
$ 2.00
$ 3.00
The normal selling price is $19.00 per unit. The company's capacity is 115,200 units per year. An order has been received from a
mail-order house for 1,600 units at a special price of $16.00 per unit. This order would not affect regular sales or the company's
total fixed costs.
Required:
1.What would be the total financial impact of accepting the special order? (Indicate negative cash flows with a negative sign.)
2. As a separate matter from the special order, assume the company's inventory includes 1,000 units of this product that were
produced last year and that are inferior to the current model. The units must be sold through regular channels at reduced
prices. The company does not expect the selling of these inferior units to have any affect on the sales of its current model.
What unit cost is relevant for establishing a minimum selling price for the inferior units? (In other words, what is the least they
can charge for these units and not lose money?)
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
What is the financial advantage (disadvantage) of accepting the special order?
Required 1
Required 2 >
Required 1 Required 2
As a separate matter from the special order, assume the company's inventory includes 1,000 units of this product that were
produced last year and that are inferior to the current model. The units must be sold through regular channels at reduced
prices. The company does not expect the selling of these inferior units to have any affect on the sales of its current model.
What unit cost is relevant for establishing a minimum selling price for the inferior units? (Round your answer to 2 decimal
places.)
Show less A
Relevant cost per unit
Transcribed Image Text:Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 96,000 units per year is: Direct materials $ 1.50 $ 4.00 Direct labor Variable manufacturing overhead $ 0.70 Fixed manufacturing overhead $4.65 Variable selling and administrative expense Fixed selling and administrative expense $ 2.00 $ 3.00 The normal selling price is $19.00 per unit. The company's capacity is 115,200 units per year. An order has been received from a mail-order house for 1,600 units at a special price of $16.00 per unit. This order would not affect regular sales or the company's total fixed costs. Required: 1.What would be the total financial impact of accepting the special order? (Indicate negative cash flows with a negative sign.) 2. As a separate matter from the special order, assume the company's inventory includes 1,000 units of this product that were produced last year and that are inferior to the current model. The units must be sold through regular channels at reduced prices. The company does not expect the selling of these inferior units to have any affect on the sales of its current model. What unit cost is relevant for establishing a minimum selling price for the inferior units? (In other words, what is the least they can charge for these units and not lose money?) Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the financial advantage (disadvantage) of accepting the special order? Required 1 Required 2 > Required 1 Required 2 As a separate matter from the special order, assume the company's inventory includes 1,000 units of this product that were produced last year and that are inferior to the current model. The units must be sold through regular channels at reduced prices. The company does not expect the selling of these inferior units to have any affect on the sales of its current model. What unit cost is relevant for establishing a minimum selling price for the inferior units? (Round your answer to 2 decimal places.) Show less A Relevant cost per unit
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