RR Pardo Company produces a single product and has capacity to produce 105,000 units per month. Costs to produce its current monthlysales of 84,000 units follow. The normal selling price of the product is $128 per unit. A new customer offers to purchase 21,000 unitsfor $63.00 per unit. If the special offer is accepted, there will be no additional fixed overhead and no additional fixed general andadministrative costs. The special offer would not affect its normal sales.Direct materialsDirect laborVariable overheadFixed overheadFixed general and administrativeTotalsPer Unit$ 12.5015.0012.0017.5013.00$ 70.00(a) Compute the income from the special offer.(b) Should the company accept the special offer?Costs at 84,000Units$ 1,050,0001,260,0001,008,0001,470,0001,092,000$ 5,880,000 Note: Round your "Per Unit" answers to 2 decimal places.Variable costsSPECIAL OFFER ANALYSISContribution marginFixed costsFixed overheadFixed general and administrativeIncome$Per Unit0.000.00 $Total0

It is the process of making decisions that involve the management of costs to achieve long-term…

Answered: Pardo Company produces a single product…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 4EA: Zena Technology sells arc computer printers for $55 per unit. Unit product costs are: A special...

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Markson and Sons leases a copy machine with terms that include a fixed fee each month plus acharge for each copy made. Markson made 9,000 copies and paid a total of $480 in January. In April, they paid $320 for 5,000 copies. What is the variable cost per copy if Markson uses the high-low method to analyze costs?
Cadre, Inc., sells a single product with a selling price of $120 and variable costs per unit of $90. The companys monthly fixed expenses are $180,000. What is the companys break-even point in units? What is the companys break-even point in dollars? Prepare a contribution margin income statement for the month of October when they will sell 10,000 units. How many units will Cadre need to sell in order to realize a target profit of $300,000? What dollar sales will Cadre need to generate in order to realize a target profit of $300,000? Construct a contribution margin income statement for the month of August that reflects $2,400,000 in sales revenue for Cadre, Inc.
Markson and Sons leases a copy machine with terms that include a fixed fee each month of $500 plus a charge for each copy made. The company uses the high-low method to analyze costs. If Markson paid $360 for 5,000 copies and $280 for 3,000 copies, how much would Markson pay if it made 7,500 copies?
Gelbart Company manufactures gas grills. Fixed costs amount to 16,335,000 per year. Variable costs per gas grill are 225, and the average price per gas grill is 600. Required: 1. How many gas grills must Gelbart Company sell to break even? 2. If Gelbart Company sells 46,775 gas grills in a year, what is the operating income? 3. If Gelbart Companys variable costs increase to 240 per grill while the price and fixed costs remain unchanged, what is the new break-even point?
Kerr Manufacturing sells a single product with a selling price of $600 with variable costs per unit of $360. The companys monthly fixed expenses are $72,000. What is the companys break-even point in units? What is the companys break-even point in dollars? Prepare a contribution margin income statement for the month of January when they will sell 500 units. How many units will Kerr need to sell in order to realize a target profit of $120,000? What dollar sales will Kerr need to generate in order to realize a target profit of $120,000? Construct a contribution margin income statement for the month of June that reflects $600,000 in sales revenue for Kerr Manufacturing.
Zena Technology sells arc computer printers for $55 per unit. Unit product costs are: A special order to purchase 15,000 arc printers has recently been received from another company and Zena has idle capacity to fill the order. Zena will incur an additional $2 per printer for additional labor costs due to a slight modification the buyer wants made to the original product. One-third of the manufacturing overhead costs is fixed and will be incurred no matter how many units are produced. When negotiating the price, what is the minimum selling price that Zena should accept for this special order?
Oat Treats manufactures various types of cereal bars featuring oats. Simmons Cereal Company has approached Oat Treats with a proposal to sell the company its top selling oat cereal bar at a price of $27,500 for 20,000 bars. The costs shown are associated with production of 20,000 oat bars currently. The manufacturing overhead consists of $3,000 of variable costs with the balance being allocated to fixed costs. Should Oat Treats make or buy the oat bars?
Pardo Company produces a single product and has capacity to produce 140,000 units per month. Costs to produce its current monthly sales of 112,000 units follow. The normal selling price of the product is $106 per unit. A new customer offers to purchase 28,000 units for $64.80 per unit. If the special offer is accepted, there will be no additional fixed overhead and no additional fixed general and administrative costs. The special offer would not affect its normal sales. Direct materials Direct labor Variable overhead Fixed overhead Fixed general and administrative Totals (a) Compute the income from the special offer. (b) Should the company accept the special offer? Required A Required B SPECIAL OFFER ANALYSIS Per Unit $ 12.50 15.00 13.00 Complete this question by entering your answers in the tabs below. Variable costs 17.50 14.00 $72.00 Contribution margin Fixed costs Compute the income for the special offer. (Round your "Per Unit" answers to 2 decimal places.) Fixed overhead Fixed…
Pardo Company produces a single product and has capacity to produce 195,000 units per month. Costs to produce its current monthly sales of 156,000 units follow. The normal selling price of the product is $132 per unit. A new customer offers to purchase 39,000 units for $61.20 per unit. If the special offer is accepted, there will be no additional fixed overhead and no additional fixed general and administrative costs. The special offer would not affect its normal sales. Direct materials Direct labor Variable overhead Fixed overhead Fixed general and administrative Totals (a) Compute the income from the special offer. (b) Should the company accept the special offer? Required A Required B Complete this question by entering your answers in the tabs below. Variable costs Per Unit $ 12.50 15.00 10.00 17.50 13.00 $ 68.00 SPECIAL OFFER ANALYSIS Compute the income for the special offer. (Round your "Per Unit" answers to 2 decimal places.) Contribution margin Fixed costs Costs at 156,000 Units…
Pardo Company produces a single product and has capacity to produce 105,000 units per month. Costs to produce its current monthly sales of 84,000 units follow. The normal selling price of the product is $144 per unit. A new customer offers to purchase 21,000 units for $63.90 per unit. If the special offer is accepted, there will be no additional fixed overhead and no additional fixed general and administrative costs. The special offer would not affect its normal sales. Direct materials Direct labor Variable overhead Fixed overhead Fixed general and administrative Totals (a) Compute the income from the special offer. (b) Should the company accept the special offer? Required A Required B Variable costs Per Unit $ 12.50 15.00 13.00 17.50 13.00 $ 71.00 Complete this question by entering your answers in the tabs below. Contribution margin Fixed costs Fixed overhead Fixed general and administrative Income Costs at 84,000 Units Compute the income for the special offer. (Round your "Per Unit"…
Luca Inc. has received a special order for 2,000 units of its product at a special price of $75. The product normally sells for $100 and has the following manufacturing costs: Assume that Luca Inc. has sufficient capacity to fill the order without harming normal production and sales. If Luca Inc. accepts the order, what effect will the order have on the company's short-term profit? Per Unit Direct materials $30 Direct labor $20 Variable manufacturing overhead $15 Fixed manufacturing overhead $25 a. $50,000 decrease b. $30,000 increase c. $20,000 increase d. $30,000 decrease
Ross has received a special order for 10,000 units of its product at a special price of $15. The product normally sells for $22 and has the following manufacturing costs: Per unit Direct materials $ 6 Direct labor 4 Variable manufacturing overhead 3 Fixed manufacturing overhead 7 Unit cost $ 20 Assume that Ross has sufficient capacity to fill the order. If Ross accepts the order, what effect will the order have on the company’s short-term profit?

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