Hidden Valley Company produces precision components. Hidden Valley has six customers, one of which accounts for 40 percent of the sales, with the remaining five accounting for the rest of the sales. The five smaller customers purchase components in roughly equal quantities. Orders placed by the smaller customers are about the same size. Data concerning Hidden Valley 's customer activity follow. Large Customers - Units purchased 200,000, Orders placed 20, Number of sales calls 25, Manufacturing cost $600,000. Five Small Customers - Units purchased 300,000, Orders placed 380, Number of sales calls 225, Manufacturing cost $900,000. Marketing and distribution costs for Hidden Valley Company consist of order filling - $200,000 and sales-force costs of $285,000. Using an activity based costing approach determine the average amount of ORDER-FILLING costs assigned to a small customer. (Round to the nearest $1.00)

San Jose Company operates a Manufacturing Division and an Assembly Division. Both divisions are evaluated as profit centers. Assembly buys components from Manufacturing and assembles them for sale. Manufacturing sells many components to third parties in addition to Assembly. Selected data from the two operations follow.     Manufacturing Assembly Capacity (units)   421,000     221,000   Sales pricea $ 442   $ 1,405   Variable costsb $ 265   $ 522   Fixed costs $ 40,210,000   $ 24,210,000     a For Manufacturing, this is the price to third parties. b For Assembly, this does not include the transfer price paid to Manufacturing.   Required: a. Current production levels in Manufacturing are 221,000 units. Assembly requests an additional 61,000 units to produce a special order. What transfer price would you recommend? b. Suppose Manufacturing is operating at full capacity. What transfer price would you recommend? c. Suppose Manufacturing is operating at 390,500 units. What…

Cane Company manufactures two products called Alpha and Beta that sell for $130 and $90, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 102,000 units of each product. Its average cost per unit for each product at this level of activity are given below:   Alpha Beta Direct materials $ 25 $ 10 Direct labor 22 21 Variable manufacturing overhead 17 7 Traceable fixed manufacturing overhead 18 20 Variable selling expenses 14 10 Common fixed expenses 17 12 Total cost per unit $ 113 $ 80 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars.   13. Assume that Cane’s customers would buy a maximum of 82,000 units of Alpha and 62,000 units of Beta. Also assume that the raw material available for production is limited to 162,000 pounds. How many…

Pharoah International Corporation has two divisions, beta and gamma. Beta produces an electronic component that sells for $75 per unit, with the following costs based on its capacity of 213,000 units: Direct materials $22 Direct labour 17 Variable overhead 4 Fixed overhead 12 Beta is operating at 74% of normal capacity and gamma is purchasing 14,500 units of the same component from an outside supplier for $69 per unit. (a) Calculate the benefit, if any, to beta in selling to gamma 14,500 units at the outside supplier's price. Benefit $ per unit

Rupert’s Appliance Warehouse (RAW) delivers appliances to retailers throughout the city. The firm adds 6 percent to the cost of the appliances to cover the delivery cost. The delivery fee is meant to cover the cost of delivery. The finance team at RAW has analyzed the delivery service using activity-based costing methods and identified four activities. Data on these activities follow: Activity Cost Driver Activity Cost Cost Driver Volume Processing order Number of orders $ 42,000 3,000 orders Loading truck Number of items 171,000 95,000 items Delivering order Number of orders 51,000 3,000 orders Billing Number of invoices 34,000 2,000 invoices Total overhead   $ 298,000     Two of Rupert's customers are McLean Designs and Neveux Appliances. Data for orders and deliveries to these two customers follow:   McLean Designs Neveux Appliances Order value (total) $ 76,000 $ 86,000 Number of orders 56 136 Total number of items 400 1,600 Number of invoices 10 130…

Dalton Quilting Company makes blankets that it markets through a variety of department stores. It makes the blankets in batches of 1,400 units. Dalton made 24,000 blankets during the prior accounting period. The cost of producing the blankets is summarized here. Materials cost ($10 per unit x 24,000) Labor cost ($9 per unit x 24,000) Manufacturing supplies ($1.50 × 24,000) Batch-level costs (20 batches at $4,200 per batch) Product-level costs. Facility-level costs Total costs Cost per unit = $846,000 ÷ 24,000 = $35.25 $ 240,000 216,000 36,000 84,000 96,000 174,000 $ 846,000 Required a. Sunny Motels has offered to buy a batch of 700 blankets for $25 each. Dalton's normal selling price is $46 per unit. Calculate the relevant cost per unit for the special order. Based on the preceding quantitative data, should Dalton accept the special order? a. Cost per unit a. Should Dalton accept the special order? b. Cost per unit b. Should Dalton accept the special order? b. Sunny offered to buy a…

Hamlet Industries is organized into two divisions, Fabrication and Finishing. Both divisions are considered to be profit centers, and the two division managers are evaluated in large part on divisional income. The company makes a single product. It is manufactured in Fabrication and then packaged and sold in Distribution. There is no intermediate market for the product. The monthly income statements, in thousands of dollars, for the two divisions follow. Production and sales amounted to 32,000 units. Fabrication ($000) $ 4,800 3,840 Distribution ($000) $ 8,000 5,920 $ 2,080 1,280 $ 960 800 $ 160 $ 800 Revenues Variable costs Contribution margin Fixed costs Divisional profit Assume there is no special order pending. Required: a. What transfer price would you recommend for Hamlet Industries? b. Using your recommended transfer price, what will be the income of the two divisions, assuming monthly production and sales of 32,000 units? c. The manager of the Fabrication Division complains…

Cane Company manufactures two products called Alpha and Beta that sell for $150 and $105, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 107,000 units of each product. Its average cost per unit for each product at this level of activity are given below:   Alpha Beta Direct materials $ 30 $ 10 Direct labor 25 20 Variable manufacturing overhead 12 10 Traceable fixed manufacturing overhead 21 23 Variable selling expenses 17 13 Common fixed expenses 20 15 Total cost per unit $ 125 $ 91 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 1. Assume that Cane expects to produce and sell 55,000 Alphas during the current year. A supplier has offered to manufacture and deliver 55,000 Alphas to Cane for a price of $100 per unit. What is the financial…

Cane Company manufactures two products called Alpha and Beta that sell for $140 and $100, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 106,000 units of each product. Its average cost per unit for each product at this level of activity is given below:

Hamlet Industries is organized into two divisions, Fabrication and Finishing. Both divisions are considered to be profit centers, and the two division managers are evaluated in large part on divisional income. The company makes a single product. It is manufactured in Fabrication and then packaged and sold in Distribution. There is no intermediate market for the product. The monthly income statements, in thousands of dollars, for the two divisions follow. Production and sales amounted to 32,000 units.   Fabrication ($000) Distribution ($000) Revenues $ 4,800 $ 8,000 Variable costs 3,840 5,920 Contribution margin $ 960 $ 2,080 Fixed costs 800 1,280 Divisional profit $ 160 $ 800 The company has just received an offer to buy 3,200 units of the product this month at a price of $200 per unit. The Distribution Division manager suggests that for the special order only, the transfer price be set at 50 percent of the sales price, or $100 per unit. Required: What is the…