Klean Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on clothing while managing heat. Y-Go has become very popular in undergarments for sports activities. Operating at capacity, the company can produce 1,065,000 Y-Go undergarments a year. The per unit and the total costs for an individual garment when the company operates at full capacity are as follows. Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Totals Revenues Variable costs; Direct materials Direct labor Variable overhead Total variable costs Net Income Per Undergarment $1.92 $ Klean Fiber should $ 0.43 The U.S. Army has approached Klean Fiber and expressed an interest in purchasing 249,000 Y-Go undergarments for soldiers in extremely warm climates. The Army would pay the unit cost for direct materials, direct labor, and variable manufacturing overhead costs. In addition, the Army has agreed to pay an additional $1.09 per undergarment to cover all other costs and provide a profit. Presently, Klean Fiber is operating at 70% capacity and does not have any other potential buyers for Y-Go. If Klean Fiber accepts the Army's offer, it will not incur any variable selling expenses related to this order. Reject Order Should Klean Fiber accept the Army's offer? 1.02 Prepare an incremental analysis for the Klean Fiber. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) 1.53 0.37 $5.27 the Army's offer. Total $ $2,044,800 $ 457,950 1,086,300 1,629,450 394,050 $5,612,550 Accept Order $ $ Net Income Increase (Decrease)
Klean Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on clothing while managing heat. Y-Go has become very popular in undergarments for sports activities. Operating at capacity, the company can produce 1,065,000 Y-Go undergarments a year. The per unit and the total costs for an individual garment when the company operates at full capacity are as follows. Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Totals Revenues Variable costs; Direct materials Direct labor Variable overhead Total variable costs Net Income Per Undergarment $1.92 $ Klean Fiber should $ 0.43 The U.S. Army has approached Klean Fiber and expressed an interest in purchasing 249,000 Y-Go undergarments for soldiers in extremely warm climates. The Army would pay the unit cost for direct materials, direct labor, and variable manufacturing overhead costs. In addition, the Army has agreed to pay an additional $1.09 per undergarment to cover all other costs and provide a profit. Presently, Klean Fiber is operating at 70% capacity and does not have any other potential buyers for Y-Go. If Klean Fiber accepts the Army's offer, it will not incur any variable selling expenses related to this order. Reject Order Should Klean Fiber accept the Army's offer? 1.02 Prepare an incremental analysis for the Klean Fiber. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) 1.53 0.37 $5.27 the Army's offer. Total $ $2,044,800 $ 457,950 1,086,300 1,629,450 394,050 $5,612,550 Accept Order $ $ Net Income Increase (Decrease)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Klean Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on clothing while
managing heat. Y-Go has become very popular in undergarments for sports activities. Operating at capacity, the company can produce
1,065,000 Y-Go undergarments a year. The per unit and the total costs for an individual garment when the company operates at full
capacity are as follows.
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Variable selling expenses
Totals
Revenues
Variable costs;
Direct materials
Direct labor
Variable overhead
Total variable costs
Net Income
Per Undergarment
$1.92
$
Klean Fiber should
$
0.43
The U.S. Army has approached Klean Fiber and expressed an interest in purchasing 249,000 Y-Go undergarments for soldiers in
extremely warm climates. The Army would pay the unit cost for direct materials, direct labor, and variable manufacturing overhead
costs. In addition, the Army has agreed to pay an additional $1.09 per undergarment to cover all other costs and provide a profit.
Presently, Klean Fiber is operating at 70% capacity and does not have any other potential buyers for Y-Go. If Klean Fiber accepts the
Army's offer, it will not incur any variable selling expenses related to this order.
Reject
Order
Should Klean Fiber accept the Army's offer?
1.02
Prepare an incremental analysis for the Klean Fiber. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or
parentheses e.g. (45).)
1.53
0.37
$5.27
the Army's offer.
Total
$
$2,044,800
$
457,950
1,086,300
1,629,450
394,050
$5,612,550
Accept
Order
$
$
Net Income
Increase
(Decrease)
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