Waterways mass-produces a special connector unit that it normally sells for $3.90. It sells approximately 37,400 of these units eachyear. The unit variable costs are $2.40. A company in Canada that has been unable to produce enough of a similar connector to meetcustomer demand would like to buy 15,800 of these units at $2.70 per unit. The production of these'units is near full capacity atWaterways, so to accept the offer from the Canadian company would require temporarily adding another shift to its production line.To do this would increase unit variable manufacturing costs by $0.30. However, unit variable selling costs would be reduced by $0.20.An irrigation company has asked for a special order of 2,100 of the connectors. To meet this special order, Waterways would not needan additional shift and variable selling costs would not be reduced. The irrigation company is willing to pay $3.20 per unit.(a)Your answer is correct.What are the consequences of Waterways agreeing to provide the 15,800 units to the Canadian company? Would this be a wise"special order to accept?Waterways shouldaccept the special order because net incomeincreasesby $3160 (b)Should Waterways accept the special order from the irrigation company?Waterwaysaccept the special order because net income -by $

SPECIAL ORDER ANALYSISUntil Information is Provided, There shall be no additional Fixed…

Answered: Waterways mass-produces a special…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 6MC: Jansen Crafters has the capacity to produce 50,000 oak shelves per year and is currently selling...

See similar textbooks

Similar questions

Shelby Industries has a capacity to produce 45.000 oak shelves per year and is currently selling 40,000 shelves for $32 each. Martin Hardwoods has approached Shelby about buying 1,200 shelves for a new project and is willing to pay $26 each. The shelves can be packaged in bulk; this saves Shelby $1.50 per shelf compared to the normal packaging cost. Shelves have a unit variable cost of $27 with fixed costs of $350,000. Because the shelves dont require packaging, the unit variable costs for the special order will drop from $27 per shelf to $25.50 per shelf. Shelby has enough idle capacity to accept the contract. What is the minimum price per shelf that Shelby should accept for this special order?
Jansen Crafters has the capacity to produce 50,000 oak shelves per year and is currently selling 44,000 shelves for $32 each. Cutrate Furniture approached Jansen about buying 1,200 shelves for bookcases it is building and is willing to pay $26 for each shelf. No packaging will be required for the bulk order. Jansen usually packages shelves for Home Depot at a price of $1.50 per shell. The $1.50 per-shelf cost is included in the unit variable cost of $27, with annual fixed costs of $320.000. However, the $130 packaging cost will not apply in this case. The fixed costs will be unaffected by the special order and the company has the capacity to accept the order. Based on this information, what would be the profit if Jansen accepts the special order? A. Profits will decrease by $1,200. B. Profits will increase by $31,200. C. Profits will increase by $600. D. Profits will increase by $7,200.
Reubens Deli currently makes rolls for deli sandwiches it produces. It uses 30,000 rolls annually in the production of deli sandwiches. The costs to make the rolls are: A potential supplier has offered to sell Reuben the rolls for $0.90 each. If the rolls are purchased, 30% of the fixed overhead could be avoided, If Reuben accepts the offer, what will the effect on profit be?
Waterways mass-produces a special connector unit that it normally sells for $3.60. It sells approximately 31,700 of these units each year. The variable costs for each unit are $2.10. A company in Canada that has been unable to produce enough of a similar connector to meet customer demand would like to buy 16,500 of these units at $2.40 per unit. The production of these units is near full capacity at Waterways, so to accept the offer from the Canadian company would require temporarily adding another shift to its production line. To do this would increase variable manufacturing costs by $0.30 per unit. However, variable selling costs would be reduced by $0.20 a unit.An irrigation company has asked for a special order of 2,100 of the connectors. To meet this special order, Waterways would not need an additional shift, and the irrigation company is willing to pay $3.00 per unit.
Vista Company manufactures electronic equipment. It currently purchases the special switches used in each of its products from an outside supplier. The supplier charges Vista $1.80 per switch. Vista’s CEO is considering purchasing either machine A or machine B so the company can manufacture its own switches. The projected data are as follows: Machine A Machine B Annual fixed costs $ 141,450 $ 188,325 Variable cost per switch 0.57 0.25 Required: For each machine, what is the minimum number of switches that Vista must make annually for total costs to equal outside purchase cost? What volume level would produce the same total costs regardless of the machine purchased? What is the most profitable alternative for producing 155,000 switches per year and what is the total cost of that alternative
Vista Company manufactures electronic equipment. It currently purchases the special switches used in each of its products from an outside supplier. The supplier charges Vista $5.50 per switch. Vista's CEO is considering purchasing either machine A or machine B so the company can manufacture its own switches. The projected data are as follows: Annual fixed costs Variable cost per switch Machine A $632,400 1.78 Required: 1. For each machine, what is the minimum number of switches that Vista must make annually for total costs to equal outside purchase cost? 2. What volume level would produce the same total costs regardless of the machine purchased? 3. What is the most profitable alternative for producing 235,000 switches per year and what is the total cost of that alternative? Required 1 Required 2 Required 3 Complete this question by entering your answers in the tabs below. Machine B $ 860,100 0.80 Minimum number of switches For each machine, what is the minimum number of switches that…
Vista Company manufactures electronic equipment. It currently purchases the special switches used in each of its products from an outside supplier. The supplier charges Vista $5.20 per switch. Vista 's CEO is considering purchasing either machine A or machine B so the company can manufacture its own switches. The projected data are as follows: Machine A Machine B Annual fixed costs $ 582, 450 $ 792, 100 Variable cost per switch 1.67 0.75 Required: 1. For each machine, what is the minimum number of switches that Vista must make annually for total costs to equal outside purchase cost? 2. What volume level would produce the same total costs regardless of the machine purchased? 3. What is the most profitable alternative for producing 230,000 switches per year and what is the total cost of that alternative?
Collyer Products Inc. has a Valve Division that manufactures and sells a standard valve as follows: Capacity in units Selling price to outside customers on the intermediate market Variable costs per unit Fixed costs per unit (based on capacity) 10,000 15 8 5 The company has a Pump Division that could use this valve in the manufacture of one of its pumps. The Pump Division is currently purchasing 10,000 valves per year from an overseas supplier at a cost of $14 per valve. 3. Assume again that the Valve Division is selling all that it can produce to outside customers on the intermediate market. Also assume that $2 in variable expenses can be avoided on transfers within the company, due to reduced selling costs. What is the acceptable range, if any, for the transfer price between the two divisions? Transfer price 4. Assume the Pump Division needs 20,000 special high-pressure valves per year. The Valve Division's variable costs to manufacture and ship the special valve would be $10 per…
DeCesare Computers makes 5000 units of a circuit board, CB76 at a cost of $280 each. Variable cost per unit is $170 and fixed cost per unit is $110. Peach Electronics offers to supply 5000 units of CB76 for $260. If buys from Peach it will be able to save $15 per unit in fixed costs but continue to incur the remaining $95 per unit. Should DeCesare accept Peach's offer? Explain. TX Manufacturing is deciding whether to keep or replace an old machine. It obtains the following information: Old Machine New Machine Original cost $10,400 $9,200 Useful life 13 years 3 years Current age 10 years 0 years Remaining useful life 3 years 3 years Accumulated depreciation $8,000 Not acquired yet Book value $2,400 Not acquired yet Current disposal value (in cash) $2,000 Not acquired yet Terminal disposal value (3 years from now) $0…
Suko Na Ba Co. produces cellular phone cases. Each case requires a keypad which it also manufactures at a cost of P20 per unit, inclusive of fixed overhead cost of P5. Suko Na Ba Co. needs 50,000 units of this keypad annually. A supplier, Hindi Pa Co. has offered to sell to Suko Na Ba Corporation its keypad requirements at P24 per unit. If Suko Na Ba decides to buy the keypads, P2 per unit of the fixed overhead based on the annual estimate could be eliminated, and the facility previously used to produce the key pad could be rented to another company.If Suko Na Ba Co. outsource the keypads but does not rent the unused facility, it would __?
The pipes and plastic company manufactures wiring tools. The company is currently producing well below its full capacity. An Accra based company has approached pipes and plastics limited with an offer to buy 10,000 tools at ghc 1.75 each. Pipes and plastic limited sells its tools wholesale for ghc 1.85each; the average cost per unit is gh1.83 of which ghc 0.27 is fixed costs. If pipes and plastics were to accept the Accra based company's offer, what will be the increase in pipes and plastic operating profit?
B. Smash Company manufactures professional paperweights and has been approached by a new customer with an offer to purchase 15,000 units at a per-unit price of P7.00.The new customer is geographically separated from Smash’s other customers, and existing sales will not be affected. Smash normally produces 82,000 units but plans to produce and sell only 65,000 units in the coming year. The normal sales price is P12.00 per unit. Unit cost information is as follows: Direct materials P 3.10 Direct labor 2.25 Variable overhead 1.15 Fixed overhead 1.80 Total P` 8.30 If Smash accepts the order, no fixed manufacturing activities will be affected because there…

SEE MORE QUESTIONS

Recommended textbooks for you

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

Managerial Accounting: The Cornerstone of Busines…

Accounting

ISBN:

9781337115773

Author:

Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:

Cengage Learning

Cornerstones of Cost Management (Cornerstones Ser…

Accounting

ISBN:

9781305970663

Author:

Don R. Hansen, Maryanne M. Mowen

Publisher:

Cengage Learning

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

Managerial Accounting: The Cornerstone of Busines…

Accounting

ISBN:

9781337115773

Author:

Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:

Cengage Learning

Cornerstones of Cost Management (Cornerstones Ser…

Accounting

ISBN:

9781305970663

Author:

Don R. Hansen, Maryanne M. Mowen

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS