Question

In: Accounting

LL company budgeted 100,000 units for production during 2019. The following cost per unit information is...

LL company budgeted 100,000 units for production during 2019. The following cost per unit information is available: direct material = $5, direct labour = $10, variable manufacturing overhead = $4, variable selling per unit= $2. LL sells at $50 market price.

It received a special order for 10,000 units from a new customer in a country in which LL has never done business. This customer has offered special order price at $22 per unit. If LL accepts the order, there will be no related selling expenses for this order. LL has enough capacity to accept the order, without affecting its normal production plan.

If LL accepts this order, then the incremental contribution the order is making = $.............

Solutions

Expert Solution

Incremental Analysis Special sales order decision Per Unit Total Order(10000 Units)
Revenue from special sales order               22          220,000
Less: variable expense
Direct Material                 5            50,000
Direct labour               10          100,000
Variable overhead                 4            40,000
Incremental Contribution margin the order is making            30,000
Decision: Accept the special sales order

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

XX company budgeted 10,000 units for production during 2019. It has capacity to produce 12,000 units....
XX company budgeted 10,000 units for production during 2019. It has capacity to produce 12,000 units. Fixed factory overhead is allocated to production. The following estimated costs were provided for 10,000 units: Direct material $ 70,000 Direct labor 300,000 Variable manufacturing overhead 40,000 Fixed factory overhead costs 50,000 Total $ 460,000 All fixed costs are unavoidable. XX received an offer from another company to manufacture the 10,000 units for $39, for the same quality. In this case, when XX compares...
The Wright Company recorded the following inventory information during the month of October: UNITS UNIT COST...
The Wright Company recorded the following inventory information during the month of October: UNITS UNIT COST TOTAL COST UNITS ON HAND Balance on October 1 2,000 $1.00 $2,000 2,000 Purchased on October 8 1,200 $3.00 $3,600 3,200 Sold on October 20 1,500 1,700 Purchased on October 22 2,000 $4.00 $8,000 3,700 Sold on October 28 2,200 1,500 Purchase on October 29 1,000 $5.00 $5,000 2,500 Part B: Using the partially computed tables on the next three pages, compute the cost...
A company typically sells 100,000 units at $10 per unit. It runs a promotion that discounts each unit by $4 per unit.
Test Your Understanding: : A company typically sells 100,000 units at $10 per unit. It runs a promotion that discounts each unit by $4 per unit. To promote the discount, the company pays a flat fee of $25,000. The company sells 75,000 additional units in incremental sales. The company tells its marketing team to kill any promotion that has<10% MROI.Should the company proceed with this promotion and discount?Why or why not?
Cost of Production and Cost per Unit
A business produces one product which requires the following inputs:Direct Materials 6 kg at $ 4,80 per kgDirect labour 4 hour at $7 per hourBuilding cost $18.000 per periodLeased machine $600 for every 600 units (each machine has a capacity of 600 units)Store Cost $3.000 per period plus $3 per unita. What is the total cost of production and the cost per unit at each of the followingproduction levels?-1000 units-2000 unitsb. Explain why the cost per unit is different at...
Cost of Production and Cost per Unit
A business produces one product which requires the following inputs:Direct Materials 6 kg at $ 4,80 per kgDirect labour 4 hour at $7 per hourBuilding cost $18.000 per periodLeased machine $600 for every 600 units (each machine has a capacity of 600 units)Store Cost $3.000 per period plus $3 per unita. What is the total cost of production and the cost per unit at each of the followingproduction levels?-1000 units-2000 unitsb. Explain why the cost per unit is different at...
Diesel: At an activity volume of 60,000 units per year, the unit cost of production of...
Diesel: At an activity volume of 60,000 units per year, the unit cost of production of this part is calculated as follows: By Unit Total Raw Materials $4 Direct Labor $2.75 Variable indirect manufacturing costs $0.50 Specific manufacturing indirect costs $3 $180000 Common fixed manufacturing indirect costs $2.25 $135000 Unit cost for product $12.50 An outside supplier offered to sell Carthage Inc. this electrical component at only $ 10 per unit. One-third of the specific fixed manufacturing overhead is made...
Easy Breeze company produced 100,000 units, sold 90,000 units at a selling price per unit of...
Easy Breeze company produced 100,000 units, sold 90,000 units at a selling price per unit of $450, and incurred the following manufacturing costs: Direct Materials = $40 per unit Direct Labor = $18 per unit Factory overhead costs: Variable Factory Overhead = $23 per unit Fixed Factory overhead = $250,000 Semi-variable Factory overhead cost is $70,000. The company utilized 14,000 machine hours during this period. The following additional information is provided semi-variable factory overhead into variable and fixed factory overhead...
Easy Breeze company produced 100,000 units, sold 90,000 units at a selling price per unit of...
Easy Breeze company produced 100,000 units, sold 90,000 units at a selling price per unit of $450, and incurred the following manufacturing costs: Direct Materials = $40 per unit Direct Labor = $18 per unit Factory overhead costs: Variable Factory Overhead = $23 per unit Fixed Factory overhead = $250,000 Semi-variable Factory overhead cost is $70,000. The company utilized 14,000 machine hours during this period. The following additional information is provided semi-variable factory overhead into variable and fixed factory overhead...
The following data are given for Harry Company: Budgeted production 1,056 units Actual production   900 units...
The following data are given for Harry Company: Budgeted production 1,056 units Actual production   900 units Materials:     Standard price per ounce $1.758     Standard ounces per completed unit 11     Actual ounces purchased and used in production 10,197     Actual price paid for materials $20,904 Labor:     Standard hourly labor rate $14.09 per hour     Standard hours allowed per completed unit 4.4     Actual labor hours worked 4,635     Actual total labor costs $75,319 Overhead:     Actual and budgeted fixed overhead $1,054,000     Standard variable overhead rate $24.00 per...
The following data are given for Stringer Company: Budgeted production 959 units Actual production   1,063 units...
The following data are given for Stringer Company: Budgeted production 959 units Actual production   1,063 units Materials:     Standard price per ounce $1.9     Standard ounces per completed unit 10     Actual ounces purchased and used in production 10,949     Actual price paid for materials $22,445 Labor:     Standard hourly labor rate $14.96 per hour     Standard hours allowed per completed unit 4.6     Actual labor hours worked 5,474.45     Actual total labor costs $83,485 Overhead:     Actual and budgeted fixed overhead $1,186,000     Standard variable overhead rate $27.00 per...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT