Olson manufactures and sells 5,000 gun cabinets each month. A principal component part in each cabinet is a lock mechanism to keep them secure. Olson's plant currently has the monthly capacity to produce 8,000 lock mechanisms. The costs of manufacturing these mechanisms at full capacity are as follows. Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Fixed costs per month: Fixed manufacturing overhead 2$ 14 12 $ 10,000 Security Cases has offered to buy 3,000 lock mechanisms per month from Olson for use in its fireproof cases. Compute the following. a. The average unit cost of manufacturing each lock mechanism assuming that Olson manufactures only enough locks for its own gun cabinets. b. The incremental unit cost of producing one additional lock mechanism. c. The per-unit sales price that Olson should charge to earn $12,000 in monthly pretax profit on sales made to Security Cases. a. Average per-unit manufacturing cost b. Incremental unit cost C. Unit sales price

Olson manufactures and sells 5,000 gun cabinets each month. A principal component part in each cabinet is a lock mechanism to keep them secure. Olson's plant currently has the monthly capacity to produce 8,000 lock mechanisms. The costs of manufacturing these mechanisms at full capacity are as follows. Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Fixed costs per month: Fixed manufacturing overhead 2$ 14 12 $ 10,000 Security Cases has offered to buy 3,000 lock mechanisms per month from Olson for use in its fireproof cases. Compute the following. a. The average unit cost of manufacturing each lock mechanism assuming that Olson manufactures only enough locks for its own gun cabinets. b. The incremental unit cost of producing one additional lock mechanism. c. The per-unit sales price that Olson should charge to earn $12,000 in monthly pretax profit on sales made to Security Cases. a. Average per-unit manufacturing cost b. Incremental unit cost C. Unit sales price

Name: Exercise 21.3 (Static) Incremental Analysis: Accepting a Special Orde
Uploaded: 2024-03-20T06:32:49.000Z
Channel: Bartleby
Description: Exercise 21.3 (Static) Incremental Analysis: Accepting a Special Order (LO21-1, LO21-2, LO21-3)Olson manufactures and sells 5,000 gun cabinets each month. A principal component part in each cabinet is a lock mechanism tokeep them secure. Olson's pla

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Comer Company produces and sells strings of colorful indoor/outdoor lights for holiday display to retailers for $12.41 per string. The variable costs per string are as follows: Direct materials $1.87 Direct labor 1.70 Variable factory overhead 0.57 Variable selling expense 0.42 Fixed manufacturing cost totals $551,855 per year. Administrative cost (all fixed) totals $419,190. Comer expects to sell 247,000 strings of light next year. Required: 1. Calculate the break-even point in units.fill in the blank 1 units 2. Calculate the margin of safety in units.fill in the blank 2 units 3. Calculate the margin of safety in dollars.$fill in the blank 3
Clone Computers assembles and packages personal computer systems from brand-name components. Its Home Office PC System is assembled from components costing $1400 per system and sells for $2000. Labour costs for assembly are $100 per system. This product line's share of overhead costs is $10,000 per month. a. How many Home Office systems must be sold each month to break even on this product line? b. What will be the profit or loss for a month in which 15 Home Office systems are sold?
Reuben's Deli currently makes rolls for deli sandwiches it produces. It uses 31,000 rolls annually in the production of deli sandwiches. The costs to make the rolls are: Materials $0.24 per roll Labor 0.39 per roll Variable overhead 0.16 per roll Fixed overhead 0.20 per roll A potential supplier has offered to sell Reuben the rolls for $0.89 each. If the rolls are purchased, 30% of the fixed overhead could be avoided. If Reuben accepts the offer, what will the effect on profit be? decline in profit if he buys the rolls. Reuben would see a $
Burns Industries currently manufactures and sells 30,000 power saws per month, although it has the capacity to produce 45,000 units per month. At the 30,000- unit-per-month level of production, the per-unit cost is $85, consisting of $50 in variable costs and $35 in fixed costs. Burns sells its saws to retail stores for $90 each. Allen Distributors has offered to purchase 6,000 saws per month at a reduced price. Burns can manufacture these additional units with no change in its present level of fixed manufacturing costs. Burns decides to accept the special order for 6,000 units from Allen at a unit sales price that will add $120,000 per month to its operating income. The unit price Burns is charging Allen is: Multiple Choice $85. $50 $90. $70.
Talbot Industries manufactures two models of wireless headset: TI-12 and TI-28. Each product requires time on a single machine. The machine has a monthly capacity of 540 hours. Total market demand for the two products is limited to 2,000 units of TI-12 and 1,000 units of TI-28 monthly. Talbot is currently producing and selling 1,500 TI-12 models and 780 TI-28 models each month. Cost and machine-usage data for the two products are shown in the following spreadsheet, which analysts at Talbot use for production planning purposes: Price Less variable costs per unit Material Labor Overhead Contribution margin per unit Fixed costs Manufacturing Marketing and administrative Machine hours per unit Machine hours used Machine hours available Quantity produced Maximum demand Profit Required A Required B TI-12 Model TI-28 Model TI-12 $ 80 23 29 8 $ 20 units units 0.1
Temple, Inc. produces several models of docks. An outside supplier has offered to produce the commercial dlocks for Temple for $420 each. Temple needs 1,500 docks annually. Temple has provided the following unit costs for its commercial clocks: Direct materials $100 Direct labor 120 Variable overhead 80 Fixed overhead (40% avoidable) 150 The Net cost savings if commercial docks are produced is
.
Sheridan Ranch Inc. has been manufacturing its own finials for its curtain rods. The company is currently operating at 100% of capacity, and variable manufacturing overhead is charged to production at the rate of 66% of direct labor cost. The direct materials and direct labor cost per unit to make a pair of finials are $4 and $5, respectively. Normal production is 34,300 curtain rods per year. A supplier offers to make a pair of finials at a price of $13.05 per unit. If Sheridan Ranch accepts the supplier's offer, all variable manufacturing costs will be eliminated, but the $45,700 of fixed manufacturing overhead currently being charged to the finials will have to be absorbed by other products. (a) Prepare the incremental analysis for the decision to make or buy the finials. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Direct materials. Direct labor Variable overhead costs Fixed manufacturing costs Purchase price Total…
Muspest Supplies is currently evaluating the cost of manufacturing some of the components utilised in their products. Currently the company expects to need 6 000 parts each month. A supplier of the part has been identified and the total cost of purchasing the parts on a monthly basis would be $97 000. In analysing the part costs, the direct labour and materials cost would be $64 000 and the variable overheads would be $22 000.Based only on the relevant cost per unit, which would be the preferred option of Muspest Supplies?HD EDUCATIONA. Unit costs to produce the part would be $14.33 with the unit cost to purchase of $ 16.17. In this case, the best option would be to commence purchasing the part.B. Unit costs to produce the part would be $10.67 with the unit cost to purchase of $ 16.17. In this case, the best option would be to continue to make the part.C. None of the other answers D. Unit costs to produce the part would be $14.33 with the unit cost to purchase of $ 16.17. In this case,…
The Svenson corporation manufactures cell phones. It manufactures its own circuit boards for cell phones, an important part for the cell phone.The unit variable cost of raw materials is $180The variable unit labor cost is $65.The unit variable cost of indirect costs is $13Fixed costs are $6,000The number of parts it manufactures is 700 cell phones in a month.Morly, an electrical parts supplier, offers to sell you the board for $210 plus freight of $8 per unit.• Determine whether it is best for you to continue manufacturing the part or purchase it from the supplier.• Calculate the profit or loss you would have if you accepted the supplier's proposal.
Nardin Outfitters has a capacity to produce 12,000 of their special arctic tents per year. The company is currently producing and selling 5,000 tents per year at a selling price of $900 per tent. The cost of producing and selling one tent follows: Variable manufacturing costs $ 440 Fixed manufacturing costs 90 Variable selling and administrative costs 80 Fixed selling and administrative costs 50 Total costs $ 660 The company has received a special order for 500 tents at a price of $600 per tent from Chipman Outdoor Center. It will not have to pay any sales commission on the special order, so the variable selling and administrative costs would be only $45 per tent. The special order would have no effect on total fixed costs. The company has rejected the offer based on the following computations: Selling price per case $ 600 Variable manufacturing costs 440 Fixed manufacturing costs 90 Variable selling and administrative costs 45 Fixed selling and…
An all-wood furniture manufacturer operates 8 hours per day for 340 days per year, and has a demand of 2,000 units per day. There are four production cycles per day. Assume the following: 7,700 units produced per day, holding cost per unit is $5 per year, labor rate to do line set-ups is $13 per hour. With quick set-ups, the production line must be quickly re-organized. What is the target set-up cost? Please round to two decimals and do not include a dollar sign. What is the set-up time in minutes? Please round to the nearest two decimals, and do not write the word "minutes" in your answer just enter your number with the two decimals.