Kobe Company has manufactured 200 partially finished cabinets at a cost of $102,000. These can be sold as is for $122,400. Instead, the cabinets can be stained and fitted with hardware to make finished cabinets. Further processing costs would be $24,500, and the finished cabinets could be sold for $163,200. If Kobe Company processes the cabinets further, incremental income is:

Kobe Company has manufactured 200 partially finished cabinets at a cost of $102,000. These can be sold as is for $122,400. Instead, the cabinets can be stained and fitted with hardware to make finished cabinets. Further processing costs would be $24,500, and the finished cabinets could be sold for $163,200. If Kobe Company processes the cabinets further, incremental income is:

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 5EA: Shelby Industries has a capacity to produce 45.000 oak shelves per year and is currently selling...

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Shelby Industries has a capacity to produce 45.000 oak shelves per year and is currently selling 40,000 shelves for $32 each. Martin Hardwoods has approached Shelby about buying 1,200 shelves for a new project and is willing to pay $26 each. The shelves can be packaged in bulk; this saves Shelby $1.50 per shelf compared to the normal packaging cost. Shelves have a unit variable cost of $27 with fixed costs of $350,000. Because the shelves dont require packaging, the unit variable costs for the special order will drop from $27 per shelf to $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?
Country Diner currently makes cookies for its boxed lunches. It uses 40,000 cookies annually in the production of the boxed lunches. The costs to make the cookies are: A potential supplier has offered to sell Country Diner the cookies for $0.85 each. If the cookies are purchased, 10% of the fixed overhead could be avoided. If Jason accepts the offer, what will the effect on profit be?
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