$ 130   Fixed $ 270   Selling and administrative costs:       Variable $ 20   Fixed $ 40  Woolgar Symphony Orchestra is interested in purchasing Bharu's excess capacity of 200 units but only if they can get the violins for $350 each. This special order would not affect regular sales or the total fixed costs. Assume that Bharu is manufacturing and selling at capacity (5,000 units). Any special order will mean a loss of regular sales. Under these conditions if the special order from Woolgar Symphony Orchestra is accepted, the financial advantage (disadvantage) Bharu for the year should

Carlyle Lighting Products produces two different types of lamps: a floor lamp and a desk lamp. Floor lamps sell for $30 and desk lamps sell for $20. The projected income statement for the upcoming year follows: Sales                                  $600,000 Less: Variable costs            400,000 Contribution margin            200,000 Less: Fixed costs                 150,000 Operating income                $50,000 The owner of Carlyle’s estimates that 60 percent of the sales revenues will be produced by floor lamps and the remaining 40 percent by desk lamps. Floor lamps are also responsible for 60 percent of the variable expenses. Of the fixed expenses, one-third are common to both products, and one-half are directly traceable to the floor lamp product line. Required: By what percentage will profits increase with this change in sales volume? What is the theory behind the operating leverage concept?

Interchange Inc. had sales of $400,000, based on a unit selling price of $200. The variable cost per unit was $175, and fixed costs were $75,000. The maximum sales within Interchange Inc.’s relevant range are 2,750 units. Interchange Inc. is considering a proposal to spend an additional $32,750 on billboard advertising during the current year in an attempt to increase sales and utilize unused capacity.a. Construct a cost-volume-profit chart indicating the break-even sales for last year. Verify your answer, using the break-even equation. b. Using the cost-volume-profit chart prepared in part (1), determine (A) the income from operations for last year and (B) the maximum income from operations that could have been realized during the year. Verify your answers using the mathematical approach to cost-volume-profit analysis. c. Construct a cost-volume-profit chart indicating the break-even sales for the current year, assuming that a noncancellable contract is signed for the additional…

Shelby Industries has a capacity to produce 45,00045,000 oak shelves per year and is currently selling 40,00040,000 shelves for $32$32 each. Martin Hardwoods has approached Shelby about buying 1,2001,200 shelves for a new project and is willing to pay $26$26 each. The shelves can be packaged in bulk; this saves Shelby $1.50$1.50 per shelf compared to the normal packaging cost. Shelves have a unit variable cost of $27$27 with fixed costs of $350,000$350,000. Because the shelves don’t require packaging, the unit variable costs for the special order will drop from $27$27 per shelf to $25.50$25.50 per shelf. Shelby has enough idle capacity to accept the contract. What is the minimum price per shelf that Shelby should accept for this special order?

Waterways mass-produces a special connector unit that it normally sells for $3.60. It sells approximately 31,700 of these units each year. The variable costs for each unit are $2.10. A company in Canada that has been unable to produce enough of a similar connector to meet customer demand would like to buy 16,500 of these units at $2.40 per unit. The production of these units is near full capacity at Waterways, so to accept the offer from the Canadian company would require temporarily adding another shift to its production line. To do this would increase variable manufacturing costs by $0.30 per unit. However, variable selling costs would be reduced by $0.20 a unit.An irrigation company has asked for a special order of 2,100 of the connectors. To meet this special order, Waterways would not need an additional shift, and the irrigation company is willing to pay $3.00 per unit.

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