FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
thumb_up100%
Wharton Company has the capacity to produce 50,000 units per year. The company sells each unit for $125. Budgeted information is as follows:
Revenues | $5,612,000 | |
Direct materials | $1,932,000 | |
Direct labor | 552,000 | |
Manufacturing |
276,000 | |
Manufacturing overhead (variable) | 552,000 | 3,312,000 |
Total | $2,300,000 |
A special order has been received for 5,000 units to be sold for $80 per unit. The company would incur an additional $60,000 in total fixed costs in order to lease a special machine in order to make a slight modification to the original product. Should the company accept the special order?
A. Yes, the revenue will increase substantially.
B. No, total costs would increase by $303,600.
C. Yes, profit will increase by $36,400.
D. No, accepting this order would decrease profits to $2,263,600.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by stepSolved in 2 steps
Knowledge Booster
Similar questions
- Fazel Company makes and sells paper products. In the coming year, Fazel expects total sales of $18,000,000. There is a 6% commission on sales. In addition, fixed expenses of the sales and administrative offices include the following: Salaries $ 960,000 Utilities 365,000 Office space 230,000 Advertising 1,200,000 Required: Prepare a selling and administrative expenses budget for Fazel Company for the coming year. Fazel Company Selling and Administrative Expenses Budget For the Coming Year Variable selling expenses Fixed expenses: Salaries Utilities Office space Advertising Total fixed expenses Total selling and administrative expensesarrow_forwardMandy Corporation sells a single product. Budgeted sales for the year are anticipated to be 662,000 units, estimated beginning inventory is 110,000 units, and desired ending inventory is 87,000 units. The quantities of direct materials expected to be used for each unit of finished product are given below. Material A 0.50 lb. per unit @ $0.52 per pound Material D 1.00 lb. per unit @ $2.46 per pound Material C 1.20 lb, per unit @ $1.01 per pound The dollar amount of Material t used in production during the year is O&$1571,940 Ob $1.257.552 O $2,357910 Od $1.886.320arrow_forwardThe budgeted income statement presented below is for Burkett Corporation for the coming fiscal year. Compute the number of units that must be sold in order to achieve a target income of $130,000. Sales (50,000 units) $1,000,000 Costs: Direct materials $ 270,000 Direct labor 240,000 Fixed factory overhead 100,000 Variable factory overhead 150,000 Fixed marketing costs 110,000 Variable marketing costs 50,000 Income 920,000 $ 80,000 O a. 53,165. O b. 81,250. Oc 36,207. O d. 50,000. Oe. 58,621.arrow_forward
- Stephanie Corporation sells a single product. Budgeted sales for the year are anticipated to be 640,000 units, estimated beginning inventory is 108,000 units, and desired ending inventory is 90,000 units. The quantities of direct materials expected to be used for each unit of finished product are given below. Material A 0.50 lb. per unit @ $0.70 per pound Material B 1.00 lb. per unit @ $1.70 per pound Material C 1.20 lbs. per unit @ $1.00 per pound The dollar amount of Material A used in production during the year is a.$311,000 b.$528,700 c.$224,600 d.$217,700arrow_forwardHigh Trails manufactures backpacks for adventurers. Totals sales for the year are budgeted at 2,400 backpacks, at a price of $90 each. Variable selling expenses include commissions ( 3% of sales price) and delivery costs ( $12 per backpack). Annual fixed selling and administrative expenses include general liability insurance ( $9,000), sales fleet depreciation ( $135,000), administrative salaries ( $270,000), and rent on the office building ( $63,000). High Trails pays all costs as they are incurred. What is the amount of cash budgeted for Selling and Administrative expenses for the year? Select one: a. $377,280 b. $368,280 c. $477,000 d. $512,280 e. None of these options are correct.arrow_forwardUse the information below for Mandy Corporation to answer the question that follow. Mandy Corporation sells a single product. Budgeted sales for the year are anticipated to be 696,000 units, estimated beginning inventory is 106,000 units, and desired ending inventory is 89,000 units. The quantities of direct materials expected to be used for each unit of finished product are given below.Material A: 0.50 lb. per unit @ $0.71 per poundMaterial B: 1.00 lb. per unit @ $1.89 per poundMaterial C: 1.20 lb. per unit @ $0.84 per poundThe dollar amount of Material B used in production during the year isarrow_forward
- Friday Night, Inc. manufactures high-quality 5-liter boxes of wine which It sells for $14 per box. Below is some information related to Friday Night's capacity and budgeted foed marufacturing costs for 2021; Denominator Level Capacity Concept Days of Hours of Fixed Manufacturing Production ProductionBoxes per Overhead per Period per Perlod per Day Hour Theoretical capacity Practical capacity Normal capacity Master budget capacity $2,500,000 $2.500.000 $2,500.000 $2.500,000 22 300 362 310 310 310 16 250 175 16 16 200 Production during 2021 was 990,000 boxes of wine, with 15,000 remaining in ending inventory at 12/31/21. Actual varlable manufacturing costs were $1,762,200 (there are no varlable cost variances). Actual foed manufacturing overhead costs were $2.500.000. Fixed manufacturing overhead cost variances are written off to cost of goods sold in the period in which they occur. What is gross margin under practical capacity? Hint: don't forget the production-volume variance…arrow_forwardThunder Creek Company uses 2 pounds of direct materials for each unit it produces, at a cost of $4.00 per pound. The company begins the year with 9,500 pounds of material in Raw Materials Inventory. Management desires an ending inventory of 25% of next month's materials requirements Prepare a Direct Materials Budget. (When entering answers in the direct materials budget, use the production budget for your cell references. Enter all values as positive--without a minus sign--in row 31.) 2018 Jan Feb Q1 Total April Budget #3: Direct Materials Budget Budgeted units to be produced Mar 30,800 25,200 19,200 2.00 Direct materials (pounds) per unit 2.00 Direct materials needed for production 50,400 38,400 12,600 2.00 61,600 8,600 Plus: Desired direct materials in ending inventory (pounds) 15,400 Total direct materials needed 51,000 65,800 70,200 Less: Direct materials in beginning inventory (pounds) 9,500 12,600 15,400 Budgeted purchase of direct materials 41,500 53,200 54,800 Direct material…arrow_forwardHoward Temple, Inc., expects to sell 20,000 pool cues for $12.00 each. Direct materials costs are $2.00, direct man $4.00, and manufacturing overhead is $0.80 per pool cue. The following inventory levels apply to 2020: Beginning Inventory Ending Inventory Direct materials 24,000 units 24,000 units Work-in-Process Inventory 0 units O units Finished Goods Inventory 2,000 units 2,500 units What are the 2020 budgeted costs for direct materials, direct manufacturing labor, and manufacturing overhead. O $48,000; S96,000; $19.200 O $44,000; $88,000, $17.600 O $41.000, $82.000; $16,400 O $40,000, S80,000: $16,000 - Previousarrow_forward
- Sunland Company has accumulated the following budget data for the year 2022: 1. 2. 3. 4. 5. 6. Sales: 29,200 units; unit selling price $82 Cost of one unit of finished goods: direct materials, 2 kg at $5 per kilogram; direct labour, 3 hours at $13 per hour; and manufacturing overhead, $5 per direct labour hour Inventories (raw materials only): beginning, 9,900 kg; ending, 15,700 kg Raw materials cost: $5 per kilogram Selling and administrative expenses: $219,000 Income taxes: 30% of income before income taxes Prepare a schedule showing the calculation of the cost of goods sold for 2022. SUNLAND COMPANY Computation of Cost of Goods Sold For the Year Ending December 31, 2022 Cost of goods sold Manufacturing overhead Beginning inventory Direct materials Ending inventory Number of units sold Selling and administrative expenses Direct labour Cost of one unit of finished goods eTextbook and Media $ $ $arrow_forwardCrane, Inc. makes and sells a single product, buckets. It takes 20 ounces of plastic to make one bucket. Budgeted production of buckets for the next three months is as follows: August 85000 units, September 70000 units, October 60000 units. The company wants to maintain monthly ending inventories of plastic equal to 10% of the following month's production needs. On August 31, 190000 ounces of plastic were on hand. The cost of plastic is $0.02 per gram. How much is the ending inventory of plastic to be reported on the company’s balance sheet at September 30? $2400 $120000 $7000 $2800arrow_forwardUse the information below for Mandy Corporation to answer the question that follow. Mandy Corporation sells a single product. Budgeted sales for the year are anticipated to be 643,000 units, estimated beginning inventory is 105,000 units, and desired ending inventory is 84,000 units. The quantities of direct materials expected to be used for each unit of finished product are given below.Material A: 0.50 lb. per unit @ $0.61 per poundMaterial B: 1.00 lb. per unit @ $2.37 per poundMaterial C: 1.20 lb. per unit @ $0.86 per poundThe dollar amount of Material C used in production during the year is a.$577,714 b.$770,285 c.$706,094 d.$641,904arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education