Direct materials. $ 800,000 Direct labor... 640,000 Overhead . 960,000 Selling expenses.. 560,000 Administrative expenses 480,000 Total costs and expenses. $3,440,000 A new retail store has offered to buy 10,000 of its skateboards for $45 per unit. The store is in a different market from Calla's regular customers and would not affect regular sales. A study of its costs in anticipa- tion of this additional business reveals the following: • Direct materials and direct labor are 100% variable. • Thirty percent of overhead is fixed at any production level from 80,000 units to 90,000 units; the remaining 70% of annual overhead costs are variable with respect to volume. • Selling ex penses are 60% variable with respect to number of units sold, and the other 40% of selling expenses are fixed. • There will be an additional $2 per unit selling expense for this order. • Administrative expenses would increase by a $1,000 fixed amount. Required 1. Prepare a three-column comparative income statement that reports the following: a. Annual income without the special order. b. Annual income from the special order. c. Combined annual income from normal business and the new business. 2. Should Calla accept this order?

Direct materials. $ 800,000 Direct labor... 640,000 Overhead . 960,000 Selling expenses.. 560,000 Administrative expenses 480,000 Total costs and expenses. $3,440,000 A new retail store has offered to buy 10,000 of its skateboards for $45 per unit. The store is in a different market from Calla's regular customers and would not affect regular sales. A study of its costs in anticipa- tion of this additional business reveals the following: • Direct materials and direct labor are 100% variable. • Thirty percent of overhead is fixed at any production level from 80,000 units to 90,000 units; the remaining 70% of annual overhead costs are variable with respect to volume. • Selling ex penses are 60% variable with respect to number of units sold, and the other 40% of selling expenses are fixed. • There will be an additional $2 per unit selling expense for this order. • Administrative expenses would increase by a $1,000 fixed amount. Required 1. Prepare a three-column comparative income statement that reports the following: a. Annual income without the special order. b. Annual income from the special order. c. Combined annual income from normal business and the new business. 2. Should Calla accept this order?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 8CE: Jean and Tom Perritz own and manage Happy Home Helpers, Inc. (HHH), a house-cleaning service. Each...

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Homework help. Chapter 25, number 5. Need help filling in the blanks. Thank you!
Kelly Slater desires to purchase a new front office computer system for his Surfers Paradise Inn. After considerable discussion with purveyors, he has narrowed his choices to systems sold by M. Fanning ltd. and Jamie O’Brien and Co. The associated costs of each system are as follows: M. Fanning ltd. O’Brien and Co. Initial Costs 29,000 31,000 Annual Costs: Labour 22,000 22,000 Utilities 800 600 Supplies 1,500 1,500 Maintenance 2,500 1,500 Salvage Value (in 8 years) 3,000 5,000 Required: 1.Which are sunk costs? 2.Identify the irrelevant costs and explain why these costs are irrelevant! 3.Prepare a comparative cost analysis for the two alternatives. Ignore the time value of money and taxes. Include the relevant costs. 4.Which alternative do you recommend purchasing? Explain why!
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You are a marketing manager at a company that manufactures and sells handmade jewelry. Your company is considering participating in a sales carnival event held annually in your city. The sales carnival attracts a large number of visitors, providing an opportunity for businesses to showcase and sell their products. Here are the details of the scenario for Cost-Volume-Profit (CVP) analysis. Fixed costs: Booth rental: RM500 for the duration of the carnival. ✓ Marketing materials: RM200 for banners, flyers and promotional items. ✓ Staffing: RM300 for hiring extra personnel to manage the booth during the event. Variable costs: ➤ Cost of goods sold: RM10 per piece of handmade jewelry. Sales commission: 10% of the selling price for each piece sold at the carnival. Selling price: ■ The selling price of jewelry at the carnival is expected to be RM30 per piece. Your task is to conduct a CVP analysis to determine the feasibility of participating in the sales carnival. Consider the following…
Boston Home Center (BHC) offers customers the use of a truck at $44 per trip to take purchased merchandise home. BHC reports the following information about the trucks it has for customer usage: Cost Driver Rate Cost Driver Volume Resources used Operation $ 0.55 per mile 45,400 miles Administration 25.00 per trip 1,870 trips Resources supplied Operation $ 35,000 Administration $ 62,000 Required: Compute the cost of unused operation and administration resource capacity for Boston Home Center. unused resource capacity operation administration
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Please do not give solution in image format thanku