r Corp. for the contract are $2,240,000. The equipment is highly specialized and has no alte ted in the contract, any costs incurred by Supplier Corp. plus a specified profit margin will b vent of a contract cancellation. Actual costs incurred during the first year of the contract we cted cost overruns of $128,000 due to labor inefficiencies. e that at the end of the second year of the contract, the estimate of total costs has increases an increase in cost of materials. Actual costs incurred to date are $1,800,000, excluding year late (1) recognized revenue, (2) the gross profit, and (3) adjusted contract margin to be reco ontract. gnized revenue $ s profit $ sted contract margin $ 0 0 0

Gallerani Corporation has received a request for a special order of 5,500 units of product A90 for $27.70 each. Product A90's unit product cost is $27.20, determined as follows: Direct materials $ 2.95 Direct labor 8.25 Variable manufacturing overhead Fixed manufacturing overhead 7.35 8.65 Unit product cost $27.20 Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product A90 that would increase the variable costs by $4.00 per unit and that would require an investment of $19,000 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. The annual financial advantage (disadvantage) for the company as a result of accepting this special order should be:

Comet, Inc. has been experiencing the following costs when it produces 12,000 units of a subassembly: Direct materials.. .$108,000 Direct labor.... 72,000 100,000 Fixed overhead... A supplier offers to sell Comet an identical product for $18 per unit. Determine whether Comet should continue to make the product or should buy the product under each of the following conditions: (1) The fixed overhead represents the cost of insurance, taxes and depreciation on the manufacturing plant allocated to this product on the basis of the number of square feet occupied by the manufacturing operation. Comet has no alternative plans for use of this space. If Comet makes the product, it would be: (circle one) (a) $114,000 better off (b) $36,000 better off (c) $64,000 worse off (d) $60,000 better off (e) $100,000 worse off (2) The same information as part (1) with the following modification: $40,000 of the fixed costs represent the salary of a production manager who would be let go if Comet discontinues…

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