Managerial Accounting: Creating Value in a Dynamic Business Environment
12th Edition
ISBN: 9781260417074
Author: HILTON, Ronald
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 14, Problem 45P
1.
To determine
State whether order must be accepted by providing calculations.
2.
To determine
State whether the company can accept order and meet Corporation V’s deadline.
3.
To determine
State the options that Corporation J must consider if management wants to do business with Corporation V.
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The Cool Can Company manufactures drink koozies and has been approached by a new customer with an offer to purchase 15,000 units at a per-unit price of $7.00.
The new customer is geographically separated from Cool Can's other customers, and existing sales will not be affected. Cool Can normally produces 82,000 units
but plans to produce and sell only 65,000 in the coming year. The normal sales price is $12 per unit. Unit cost information is as follows:
Direct materials
$3.10
Direct labor
Variable overhead
Fixed overhead
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1.50
1.00
1.80
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However, assume that Cool Can plans to produce and sell 70,000 units in the coming year (rather than the originally anticipated 65,000 units).
Required:
1. Using Excel (or some other spreadsheet software tool), calculate the amount by which total operating income increases or decreases if the order is accepted.
Decrease
-84,000 X
2. Conceptual Connection: Should Cool Can accept the special order when sales at the regular price are expected to…
Diamond Boot Factory normally sells its specialty boots for $20 a pair. An offer to buy 115 boots for $16 per pair was made by an organization hosting a national event in Norfolk. The variable cost per boot is $8, and special stitching will add
another $2 per pair to the cost.
Determine the differential income or loss per pair of boots from selling to the organization.
Should Diamond Boot Factory accept or reject the special offer?
The Cool Can Company manufactures drink koozies and has been approached by a new customer with an offer to purchase 15,000 units at a per-unit price of $7.00. The new
customer is geographically separated from Cool Can's other customers, and existing sales will not be affected. Cool Can normally produces 82,000 units but plans to produce and sell
only 65,000 in the coming year. The normal sales price is $12 per unit. Unit cost information is as follows:
Direct materials
Direct labor
Variable overhead
Fixed overhead
Total
$3.10
1.50
1.00
1.80
$7.40
If Cool Can accepts the order, no fixed manufacturing activities will be affected because there is sufficient excess capacity.
Required:
Download Excel spreadsheet
1. What are the alternatives for Cool Can?
2. Conceptual Connection: Should Cool Can accept the special order?
By how much will operating income increase or decrease if the order is accepted?
3. Conceptual Connection: Briefly explain the significance of the statement in the exercise…
Chapter 14 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 14 - Prob. 1RQCh. 14 - Describe the managerial accountants role in the...Ch. 14 - Distinguish between qualitative and quantitative...Ch. 14 - Prob. 4RQCh. 14 - A quantitative analysis enables a decision maker...Ch. 14 - Prob. 6RQCh. 14 - Prob. 7RQCh. 14 - Prob. 8RQCh. 14 - Is the book value of inventory on hand a relevant...Ch. 14 - Why might a manager exhibit a behavioral tendency...
Ch. 14 - Prob. 11RQCh. 14 - Prob. 12RQCh. 14 - Prob. 13RQCh. 14 - Prob. 14RQCh. 14 - Prob. 15RQCh. 14 - Briefly describe the proper approach for making a...Ch. 14 - Prob. 17RQCh. 14 - Are allocated joint processing costs relevant when...Ch. 14 - Briefly describe the proper approach to making a...Ch. 14 - What is meant by the term contribution margin per...Ch. 14 - How is sensitivity analysis used to cope with...Ch. 14 - There is an important link between decision making...Ch. 14 - List four potential pitfalls in decision making,...Ch. 14 - Why can unitized fixed costs cause errors in...Ch. 14 - Prob. 25RQCh. 14 - Prob. 26RQCh. 14 - Are the concepts underlying a relevant-cost...Ch. 14 - Prob. 28RQCh. 14 - Redo Exhibit 144 without the irrelevant data.Ch. 14 - Valley Pizzas owner bought his current pizza oven...Ch. 14 - Lamont Industries produces chemicals for the...Ch. 14 - Day Street Delis owner is disturbed by the poor...Ch. 14 - Prob. 35ECh. 14 - Intercontinental Chemical Company, located in...Ch. 14 - Intercontinentals special order also requires...Ch. 14 - Fusion Metals Company is considering the...Ch. 14 - Prob. 39ECh. 14 - Zytel Corporation produces cleaning compounds and...Ch. 14 - Duo Company manufactures two products, Uno and...Ch. 14 - Refer to the data given in the preceding exercise...Ch. 14 - Southern California Chemical Company manufactures...Ch. 14 - Kitchen Magician, Inc. has assembled the following...Ch. 14 - Prob. 45PCh. 14 - Prob. 46PCh. 14 - Tipton One-Stop Decorating sells paint and paint...Ch. 14 - Carpenters Mate, Inc. manufactures electric...Ch. 14 - Casting Technology Resources (CTR) has purchased...Ch. 14 - The Midwest Division of the Paibec Corporation...Ch. 14 - Prob. 51PCh. 14 - Prob. 52PCh. 14 - Upstate Mechanical, Inc. has been producing two...Ch. 14 - Chenango Industries uses 10 units of part JR63...Ch. 14 - Miami Industries received an order for a piece of...Ch. 14 - Prob. 56PCh. 14 - Ozark Industries manufactures and sells three...Ch. 14 - Prob. 58PCh. 14 - Deru Chocolate Company manufactures two popular...Ch. 14 - Prob. 60PCh. 14 - Prob. 61PCh. 14 - Bo Vonderweidt, the production manager for...Ch. 14 - Alberta Gauge Company, Ltd., a small manufacturing...
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