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Required information Problem 11-32 (Algo) Special Order [LO 11-2, 11-8] [The following information applies to the questions displayed below.] Award Plus Company manufactures medals for winners of athletic events and other contests. Its manufacturing plant has the capacity to produce 10,000 medals each month; current monthly production is 7,540 medals. The company normally charges $235 per medal. Variable costs and fixed costs for the current activity level follow: Current Product Costs Variable costs Manufacturing Labor Material Marketing Total variable costs Fixed costs Manufacturing Marketing Total fixed costs Total costs $ 377,000 301,600 188,500 $ 867,100 $ 277,000 227,000 $ 504,000 $ 1,371,100 Award Plus has just received a special one-time order for 2,460 medals at $125 per medal. For this particular order, no variable marketing costs will be incurred. Cathy Senna, a management accountant with Award Plus, has been assigned the task of analyzing this order and recommending whether the company should accept or reject it. After examining the costs, Senna suggested to her supervisor, Gerard LePenn, who is the controller, that they request competitive bids from vendors for the raw materials because the current quote seems high. LePenn insisted that the prices are in line with those of other vendors and told her that she was not to discuss her observations with anyone else. Senna later discovered that LePenn is a brother-in-law of the owner of the current raw materials supply vendor. Required: 1. Calculate both the old (i.e., prior to the special order) average cost per unit and the revised average cost per unit, including the effect of the special sales order. 2. What is the short-term effect on operating profit if Award Plus Company accepts the special sales order? 3. What is the breakeven selling price per unit for the special sales order?

Required information Problem 11-32 (Algo) Special Order [LO 11-2, 11-8] [The following information applies to the questions displayed below.] Award Plus Company manufactures medals for winners of athletic events and other contests. Its manufacturing plant has the capacity to produce 10,000 medals each month; current monthly production is 7,540 medals. The company normally charges $235 per medal. Variable costs and fixed costs for the current activity level follow: Current Product Costs Variable costs Manufacturing Labor Material Marketing Total variable costs Fixed costs Manufacturing Marketing Total fixed costs Total costs $ 377,000 301,600 188,500 $ 867,100 $ 277,000 227,000 $ 504,000 $ 1,371,100 Award Plus has just received a special one-time order for 2,460 medals at $125 per medal. For this particular order, no variable marketing costs will be incurred. Cathy Senna, a management accountant with Award Plus, has been assigned the task of analyzing this order and recommending whether the company should accept or reject it. After examining the costs, Senna suggested to her supervisor, Gerard LePenn, who is the controller, that they request competitive bids from vendors for the raw materials because the current quote seems high. LePenn insisted that the prices are in line with those of other vendors and told her that she was not to discuss her observations with anyone else. Senna later discovered that LePenn is a brother-in-law of the owner of the current raw materials supply vendor. Required: 1. Calculate both the old (i.e., prior to the special order) average cost per unit and the revised average cost per unit, including the effect of the special sales order. 2. What is the short-term effect on operating profit if Award Plus Company accepts the special sales order? 3. What is the breakeven selling price per unit for the special sales order?

FINANCIAL ACCOUNTING
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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Problem 11-32 (Algo) Special Order [LO 11-2, 11-8]

Required information Problem 11-32 (Algo) Special Order [LO 11-2, 11-8] [The following information applies to the questions displayed below.] Award Plus Company manufactures medals for winners of athletic events and other contests. Its manufacturing plant has the capacity to produce 10,000 medals each month; current monthly production is 7,540 medals. The company normally charges $235 per medal. Variable costs and fixed costs for the current activity level follow: Current Product Costs Variable costs Manufacturing Labor Material Marketing Total variable costs Fixed costs Manufacturing Marketing Total fixed costs Total costs $ 377,000 301,600 188,500 $ 867,100 $ 277,000 227,000 $ 504,000 $ 1,371,100 Award Plus has just received a special one-time order for 2,460 medals at $125 per medal. For this particular order, no variable marketing costs will be incurred. Cathy Senna, a management accountant with Award Plus, has been assigned the task of analyzing this order and recommending whether the company should accept or reject it. After examining the costs, Senna suggested to her supervisor, Gerard LePenn, who is the controller, that they request competitive bids from vendors for the raw materials because the current quote seems high. LePenn insisted that the prices are in line with those of other vendors and told her that she was not to discuss her observations with anyone else. Senna later discovered that LePenn is a brother-in-law of the owner of the current raw materials supply vendor.
Transcribed Image Text:Required information Problem 11-32 (Algo) Special Order [LO 11-2, 11-8] [The following information applies to the questions displayed below.] Award Plus Company manufactures medals for winners of athletic events and other contests. Its manufacturing plant has the capacity to produce 10,000 medals each month; current monthly production is 7,540 medals. The company normally charges $235 per medal. Variable costs and fixed costs for the current activity level follow: Current Product Costs Variable costs Manufacturing Labor Material Marketing Total variable costs Fixed costs Manufacturing Marketing Total fixed costs Total costs $ 377,000 301,600 188,500 $ 867,100 $ 277,000 227,000 $ 504,000 $ 1,371,100 Award Plus has just received a special one-time order for 2,460 medals at $125 per medal. For this particular order, no variable marketing costs will be incurred. Cathy Senna, a management accountant with Award Plus, has been assigned the task of analyzing this order and recommending whether the company should accept or reject it. After examining the costs, Senna suggested to her supervisor, Gerard LePenn, who is the controller, that they request competitive bids from vendors for the raw materials because the current quote seems high. LePenn insisted that the prices are in line with those of other vendors and told her that she was not to discuss her observations with anyone else. Senna later discovered that LePenn is a brother-in-law of the owner of the current raw materials supply vendor.
Required: 1. Calculate both the old (i.e., prior to the special order) average cost per unit and the revised average cost per unit, including the effect of the special sales order. 2. What is the short-term effect on operating profit if Award Plus Company accepts the special sales order? 3. What is the breakeven selling price per unit for the special sales order?
Transcribed Image Text:Required: 1. Calculate both the old (i.e., prior to the special order) average cost per unit and the revised average cost per unit, including the effect of the special sales order. 2. What is the short-term effect on operating profit if Award Plus Company accepts the special sales order? 3. What is the breakeven selling price per unit for the special sales order?
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