Question
In: Accounting
Brayton Inc. is a manufacturer of generators. Recently, the company was approached by a new customer...
Brayton Inc. is a manufacturer of generators. Recently, the company was approached by a new customer with a request for a one-time only special. The customer would like to buy 3,000 units of Brayton's generators. Although Brayton can produce 15,000 generators, actual production is 12,000.
The following is per unit data for sales to regular customers:
Direct materials: $1,275
Direct labor: $75
Variable overhead: $150
Fixed overhead: $120
Total Manufacturing Costs: $1,620
Markup (15%): $243
Estimated selling price: $1,863
Required:
(A) What is the minimum acceptable price of this one-time-only special order?
(B) Before accepting the one-time-only special order, what non-financial factors should Brayton consider?
(C) Now, assume that Brayton Inc. is operating at maximum capacity (i.e., producing 15,000 units) when management is asked to fulfill the special order. What would be the minimum acceptable price of this special order?
(D) If the customer wanted to form a long-term commitment for purchasing generators, what price should Brayton quote to the customer?
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Smooth Move Company manufactures professional paperweights and has been approached by a new customer with an...
Smooth Move 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 R70. The new
customer is geographically separated from Smooth Move's other
customers, and existing sales will not be affected. Smooth Move
normally produces 82 000 units but plans to produce and sell 65 000
in the coming year. The normal sales price is R120 per unit. Unit
cost information is as follows:
Direct...
Smooth Move Company manufactures professional paperweights and has been approached by a new customer with an...
Smooth Move 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 $9.00. The new customer is
geographically separated from Smooth Move's other customers, and
existing sales will not be affected. Smooth Move normally produces
90,000 units but plans to produce and sell only 65,000 in the
coming year. The normal sales price is $16 per unit. Unit cost
information is as follows:
Direct materials
$3.10...
Generators R Us (GRU) is a leading manufacturer of partible electric generators used for emergency power...
Generators R Us (GRU) is a leading manufacturer of partible
electric generators used for emergency power supply in both civil
and private disaster situations. Each year it produces 16,000 of
its model HI-360 units. This model used two bearings, which the
company purchases from an outside vendor. A review of accounting
and usage records reveals the following information:
labour for installing the bearings = $8 per generator;
• per-unit cost of bearings = $25;
• delivery charges per order =...
a Janice Toy Inc. is a toy manufacturer in Hong Kong. Recently, the company introduced a...
a Janice Toy Inc. is a toy manufacturer in Hong Kong. Recently,
the company introduced a new electronic bear to the market.
Although there are no other companies that sell this type of toy,
the sales figure is not ideal and customers are not aware of the
toy. Suppose you are the marketing manager of this company.
Identify and explain the stage of product life cycle that this toy
falls into, and suggest the corresponding marketing actions to be
taken....
Hat Tricks Company (HTC) is a Buffalo, New York, manufacturer of hats and gloves. Recently, the...
Hat Tricks Company (HTC) is a Buffalo, New York, manufacturer of
hats and gloves. Recently, the company purchased a new machine to
aid in producing the hat product lines. Production efficiency on
the new machine increases with the workforce experience. It has
been shown that as cumulative output on the new machine increases,
average labor time per unit decreases up to the production of at
least 3,200 units. As HTC’s cumulative output doubles from a base
of 100 units produced,...
Hat Tricks Company (HTC) is a Buffalo, New York, manufacturer of hats and gloves. Recently, the...
Hat Tricks Company (HTC) is a Buffalo, New York, manufacturer of
hats and gloves. Recently, the company purchased a new machine to
aid in producing the hat product lines. Production efficiency on
the new machine increases with the workforce experience. It has
been shown that as cumulative output on the new machine increases,
average labor time per unit decreases up to the production of at
least 3,200 units. As HTC’s cumulative output doubles from a base
of 100 units produced,...
Brent Bush, CFO of a medical device manufacturer, BioTron Medical, Inc., was approached by a Japanese...
Brent Bush, CFO of a medical device
manufacturer, BioTron Medical, Inc., was approached by a Japanese
customer, Numata, with a proposal to pay cash (in yen) for its
typical orders of ¥15,000,000 every other month if it were given a
2.0% discount. Numata's current terms are 30 days with no
discounts. Using the following quotes and estimated cost of capital
for Numata, Bush will compare the proposal with covering yen
payments with forward contracts.
Spot rate, ¥/$
¥111.40/$
30-day forward...
Brent Bush, CFO of a medical device manufacturer, BioTron Medical, Inc., was approached by a Japanese...
Brent Bush, CFO of a medical device
manufacturer, BioTron Medical, Inc., was approached by a Japanese
customer, Numata, with a proposal to pay cash (in yen) for its
typical orders of ¥15,000,000 every other month if it were given a
2.0% discount. Numata's current terms are 30 days with no
discounts. Using the following quotes and estimated cost of capital
for Numata, Bush will compare the proposal with covering yen
payments with forward contracts.
Spot rate, ¥/$
¥111.40/$
30-day forward...
Sue is a customer account representative for ABC Company. She recently acquired several new accounts when...
Sue is a customer account representative for ABC Company. She
recently acquired several new accounts when a previous
representative, Dan, took an early retirement. Sue reviewed each of
Dan’s accounts to help familiarize herself with his clients and
under- stand how she can better serve each one’s individual needs.
As she was reviewing the client list, she found a major customer
she had never heard of before. Surprised that she had not yet done
business with the company, she called...
Q3 (20%) Crandle Manufacturers Inc. is approached by a potential customer to fulfill a one-time-only special...
Q3 (20%) Crandle Manufacturers Inc. is
approached by a potential customer to fulfill a one-time-only
special order for a product similar to one offered to domestic
customers. The company has excess capacity. The following per unit
data apply for sales to regular customers:
Variable costs:
Direct
materials
$140
Direct
labor
100
Manufacturing
support
105
Fixed costs:
Manufacturing
support
175
Marketing
costs
65
Total
costs
585
Markup
(50%)
292.5
...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- (2) Cite an example on how organizations like Google, Facebook, Youtube etc collect data for image...
- The legal landscape is perpetually changing. Psychologists must remain abreast of these changes to avoid potentially...
- We are evaluating a project that costs $1.68 million, has a six-year life, and has no...
- In C++ Having call-by-reference allows one to use storeback parameters, i.e., parameters whose values are transmitted...
- You must evaluate a proposal to buy a new milling machine. The base price is $175,000,...
- “Triangle Guessing” game in Python The program accepts the lengths of three (3) sides of a...
- THIS PROGRAM HAS TO BE WRITTEN IN C Single function to perform the parity computation on...
ADVERTISEMENT