Sycamore Shops has a capacity of 50,000 units and is currently producing and selling 45,000 at $50 a unit. The present cost structure, on a per-unit basis, is: Direct material Direct labor $20 10 Variable overhead 6 Fixed overhead 8 An order for 7,000 units has been received from a Japanese company at a price of $45 per unit. The order size cannot be reduced. If the order is accepted, the profit will: A. Decrease by $35,000 B. Not change C. Increase by $63,000 D. Increase by $35,000
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- Gent Designs requires three units of part A for every unit of Al that it produces. Currently, part A is made by Gent, with these per-unit costs in a month when 4.000 units were produced: Variable manufacturing overhead is applied at $1.00 per unit. The other $0.30 of overhead consists of allocated fixed costs. Gent will need 6,000 units of part A for the next years production. Cory Corporation has offered to supply 6,000 units of part A at a price of $7.00 per unit. It Gent accepts the offer, all of the variable costs and $1,200 of the fixed costs will be avoided. Should Gent Designs accept the offer from Cory Corporation?Mohave Corp. is considering outsourcing production of ht eumbrella tote bag included with some of its products. The company has received a bid from a supplier in Vietnam to produce 9600 units per year for 7.00 each. Mohave has the following information about the cost of producing tote bags:Directs materials 3.00Direct Labor 2.00Variable manufacturing overhead 1.00Fixed manufacturing overhead 2.50Total cost per unit 8.50Mohave has deteremined that all variable costs could be eliminated by outsourcing the tote bads, while 75 percent of the fixed overhead cost is unavoidable. At this time, Mohave has no specifif use in mind for the space currently dedicated to producing the tote bags.1.) Compute the difference in cost between making and buying the umbrella tote bag. 2.) Based strictly on the incremental analysis should mohave buy the tote bags or contiunue to make them? 3-a.) Suppose that the space mohave currently uses to make the bags could be utilized by a new product line that would…Gadubhai
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- Wehes Corporation has received a request for a special order of 9.200 units of product K19 for $4610 each. The normal selling price of this product is $51.20 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product K19 is computed as follows Direct materials Direct Jabor Variable manufacturing overhead Fixed Manufacturing overhead 5 16.90 6.20 3.40 6.30 $32.00 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 some modifications made to product K19 that would increase the variable costs by $5 80 per unit and that would require a one-time investment of $45,600 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 Required: Determine the effect on the company's total net operating income of…Omega Corporation currently manufactures a component for its main product. The costs per unit are as follows: Sh. Direct materials 1.00 Direct labor 10.00 Variable overhead 5.00 Fixed overhead 8.00 Total 24.00 Zed Company has contacted Omega Company with an offer to sell them 5,000 of the components for sh. 22 each. Omega Company will eliminate sh. 25,000 of the fixed overhead if it accepts the order. should Omega company make or buy the component: . Select one: A. Make and save sh.5,000 B. Buy and save…Holly Corp. has received a request for a special order of 9,000 units of product Z74 for $46.50 each. The normal selling price of this product is $51.60 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product Z74 is computed as follows: Direct materials.. $17.30 Direct labor. 6.60 Variable manufacturing overhead... Fixed manufacturing overhead Unit product cost... 3.80 6.70 $34.40 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 some modifications made to product Z74 that would increase the variable costs by $6.20 per unit and that would require a one-time investment of $46,000 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. Determine the effect on total net operating income of…