Pardo Company produces a single product and has capacity to produce 195,000 units per month. Costs to produce its current monthlysales of 156,000 units follow. The normal selling price of the product is $132 per unit. A new customer offers to purchase 39,000 unitsfor $61.20 per unit. If the special offer is accepted, there will be no additional fixed overhead and no additional fixed general andadministrative costs. The special offer would not affect its normal sales.Direct materialsDirect laborVariable overheadFixed overheadFixed general and administrativeTotals(a) Compute the income from the special offer.(b) Should the company accept the special offer?Required A Required BComplete this question by entering your answers in the tabs below.Variable costsPer Unit$ 12.5015.0010.0017.5013.00$ 68.00SPECIAL OFFER ANALYSISCompute the income for the special offer. (Round your "Per Unit" answers to 2 decimal places.)Contribution marginFixed costsCosts at 156,000UnitsFixed overheadFixed general and administrativeIncome$ 1,950,0002,340,0001,560,0002,730,0002,028,000$ 10,608,000Per Unit0.000.00 $Total0

Decision making relating to special orders is the process that helps the management in making the…

Answered: Pardo Company produces a single product…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Dimitri Designs has capacity to produce 30,000 desk chairs per year and is currently selling all 30,000 for $240 each. Country Enterprises has approached Dimitri to buy 800 chairs for $210 each. Dimitri's normal variable cost is $165 per chair, including $50 per unit in direct labor per chair. Dimitri can produce the special order on an overtime shift, which means that direct labor would be paid overtime at 150% of the normal pay rate. The annual fixed costs will be unaffected by the special order and the contract will not disrupt any of Dimitri's other operations. PLEASE NOTE: All dollar amounts are rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345). 1. If Dimitri accepts the offer, what will be the impact on profits of accepting the order? • Incremental dollar amount = o Increase or Decrease? no quotes. Please note: Your answer is either "Increase" or "Decrease" - capital first letters and
Journal Entry for December 31st only please. Don't give answer in image format
Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $78.30 per unit. Determine whether management should accept or reject the new business.
Falcon Co. produces a single product. Its normal selling price is $25 per unit. The variable costs are $16 per unit. Fixed costs are $20,200 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,620 units with a special price of $20 per unit. Falcon has the capacity to handle the special order, and for this order, a variable selling cost of $2 per unit would be eliminated. If the order is accepted, what would be the impact on net income? a.increase of $7,776 b.increase of $9,720 c.decrease of $5,832 d.increase of $12,636
Kitts Company buys and sells a product that has a variable cost per unit of $22. Kitts' fixed costs amount to $56,000. The product sells for $26 each. The Company is currently making and selling 20,000 units of product. If Kitts is able to increase sales by 4,000 units, the break-even point will Multiple Choice increase by $16,000. decrease by $16,000. not change. The answer cannot be determined with the information provided.
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.
Eaton Tool Company has fixed costs of $435,600, sells its units for $94, and has variable costs of $50 per unit. a. Compute the break-even point. Break-even point b. Ms. Eaton comes up with a new plan to cut fixed costs to $340,000. However, more labor will now be required, which will increas variable costs per unit to $53. The sales price will remain at $94. What is the new break-even point? Note: Round your answer to the nearest whole number. New break-even point units Profitability will be less Profitability will be more units c. Under the new plan, what is likely to happen to profitability at very high volume levels (compared to the old plan)?
Goshford Company produces a single product and has capacity to produce 100,000 units per month. Costs to produce its current sales of 80,000 units follow. The regular selling price of the product is $100 per unit. Management is approached by a new customer who wants to purchase 20,000 units of the product for $75 per unit. If the order is accepted, there will be no additional fixed manufacturing overhead and no additional fixed selling and administrative expenses. The customer is not in the company’sregular selling territory, so there will be a $5 per unit shipping expense in addition to the regular variable selling and administrative expenses. Determine whether management should accept or reject the new business.
Snow Company pays a production company to produce phones for them at a cost of $200 each. Variable costs total $120 per phone, and fixed expenses are $1,998,000. Snow Company currently sells the phones for $500. 1. Snow Company found a new company to produce phones at a lower cost of $185. Calculate breakeven point in units. 2. Predicted demand for its phones is 12,000 units. What is the lowest price that can be charged in order to earn a $198,000 profit? 3. Snow Company can sell 14,000 units, but has to increase advertising costs in order to stimulate the extra demand. Snow Company still wants to earn a $198,000 profit, by how much can Snow Co. increase advertising costs to help achieve its goal?
Boulevard Company expects to sell 500,000 units in 2021 at P100 per unit. Variable manufacturing costs in producing the product amount to P40 per unit and fixed manufacturing costs amount to P25.00 per unit. A special order from Devil Company of 50,000 units were made at an offered price of P57.50 per unit. Regular sales from customers will not be affected from this transaction. However, in order to meet the specifications and requirements of Boulevard Company, overtime pay would be incurred amounting to P7.50 per unit. Determine the effect in income when the special order is accepted. Indicate whether increase or decrease 1. 500,000 increase 2. 750,000 decrease 3. 875,000 increase 4. None of the above Group of answer choices 1 2 3 4
Vaughn Co. sells product P-14 at a price of $48 a unit. The per-unit cost data are direct materials $15, direct labour $10, and overhead $16 (75% variable). Vaughn has no excess capacity to accept a special order for 36,400 units, at a discount of 25% from the regular price. Selling costs associated with this order would be $4 per unit. Indicate the net income (loss) that Vaughn would realize by accepting the special order. (Enter loss with a negative sign preceding the number, e.g. -15,000 or parenthesis, e.g. (15,000).) Incremental income (loss) Vaughn Co. should not accept the special order. (327,600)

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