Question
In: Accounting
Adams Quilting Company makes blankets that it markets through a variety of department stores. It makes...
Adams Quilting Company makes blankets that it markets through a variety of department stores. It makes the blankets in batches of 2,500 units. Adams made 25,000 blankets during the prior accounting period. The cost of producing the blankets is summarized here.
| Materials cost ($26 per unit × 25,000) | $ | 650,000 | |
| Labor cost ($20 per unit × 25,000) | 500,000 | ||
| Manufacturing supplies ($3 × 25,000) | 75,000 | ||
| Batch-level costs (10 batches at $5,000 per batch) | 50,000 | ||
| Product-level costs | 90,000 | ||
| Facility-level costs | 300,000 | ||
| Total costs | $ | 1,665,000 | |
| Cost per unit = $1,665,000 ÷ 25,000 = $66.6 | |||
|
A. Sunny Motels has offered to buy a batch of 500 blankets for $56 each. Adams’s normal selling price is $92 per unit. Calculate the relevant cost per unit for the special order. Based on the preceding quantitative data, should Adams accept the special order? B. Sunny offered to buy a batch of 2,500 blankets for $56 per unit, calculate the relevant cost per unit for the special order. Should Adams accept the special order? (For all requirements, round "Cost per unit" to 2 decimal places.) |
|||
a. Cost per unit -------------------------
-Should Adams accept the special order-----------------------------
b. Cost per unit-------------------------------
-Should Adams accept the special order --------------------------------------
Solutions
Expert Solution
A. Sunny Motels has offered to buy a batch of 500 blankets for $56 each. Adams’s normal selling price is $92 per unit. Calculate the relevant cost per unit for the special order. Based on the preceding quantitative data, should Adams accept the special order?
| Relevant cost per unit | |
| Material | 26 |
| Labour | 20 |
| Manufacturing supplies | 3 |
| Batch level cost (5000/500) | 10 |
| Relevant cost per unit | 59 |
No, Adams should not accept the special order.
b. Sunny Motels has offered to buy a batch of 2500 blankets for $56 each. Adams’s normal selling price is $92 per unit. Calculate the relevant cost per unit for the special order. Based on the preceding quantitative data, should Adams accept the special order?
| Relevant cost per unit | |
| Material | 26 |
| Labour | 20 |
| Manufacturing supplies | 3 |
| Batch level cost (5000/2500) | 2 |
| Relevant cost per unit | 51 |
Yes, Adams should accept the special order.
ekkarill92 answered 2 years agoRelated Solutions
Benson Quilting Company makes blankets that it markets through a variety of department stores. It makes...
Benson Quilting Company makes blankets that it markets through a
variety of department stores. It makes the blankets in batches of
3,000 units. Benson made 27,000 blankets during the prior
accounting period. The cost of producing the blankets is summarized
here.
Materials cost ($28 per unit × 27,000)
$
756,000
Labor cost ($22 per unit × 27,000)
594,000
Manufacturing supplies ($4 × 27,000)
108,000
Batch-level costs (9 batches at $6,000 per batch)
54,000
Product-level costs
220,000
Facility-level costs
280,000
Total...
Stuart Quilting Company makes blankets that it markets through a variety of department stores. It makes...
Stuart Quilting Company makes blankets that it markets through a
variety of department stores. It makes the blankets in batches of
6,000 units. Stuart made 36,000 blankets during the prior
accounting period. The cost of producing the blankets is summarized
here.
Materials cost ($33 per unit × 36,000)
$
1,188,000
Labor cost ($29 per unit × 36,000)
1,044,000
Manufacturing supplies ($7 × 36,000)
252,000
Batch-level costs (6 batches at $6,000 per batch)
36,000
Product-level costs
280,000
Facility-level costs
350,000
Total...
Zachary Quilting Company makes blankets that it markets through a variety of department stores. It makes...
Zachary Quilting Company makes blankets that it markets through a
variety of department stores. It makes the blankets in batches of
1,500 units. Zachary made 20,000 blankets during the prior
accounting period. The cost of producing the blankets is summarized
here.
Materials cost ($26 per unit × 20,000)
$
520,000
Labor cost ($22 per unit × 20,000)
440,000
Manufacturing supplies ($3 × 20,000)
60,000
Batch-level costs (20 batches at $3,000 per batch)
60,000
Product-level costs
320,000
Facility-level costs
390,000
Total...
Pro-Weave manufactures stadium blankets by passing the products through a weaving department and a sewing department....
Pro-Weave manufactures stadium blankets by passing the products
through a weaving department and a sewing department. The following
information is available regarding its June inventories: Beginning
Inventory Ending Inventory Raw materials inventory $ 188,000 $
193,000 Work in process inventory—Weaving 415,000 405,000 Work in
process inventory—Sewing 620,000 960,000 Finished goods inventory
1,416,000 1,236,000 The following additional information describes
the company’s manufacturing activities for June: Raw materials
purchases (on credit) $ 620,000 Factory wages cost (paid in cash)
3,260,000 Other factory...
Pro-Weave manufactures stadium blankets by passing the products through a weaving department and a sewing department....
Pro-Weave manufactures stadium blankets by passing the products
through a weaving department and a sewing department. The following
information is available regarding its June inventories:
Beginning Inventory
Ending Inventory
Raw materials inventory
$
138,000
$
225,000
Work in process inventory—Weaving
460,000
465,000
Work in process inventory—Sewing
655,000
825,000
Finished goods inventory
1,446,000
1,256,000
The following additional information describes the company’s
manufacturing activities for June:
Raw materials purchases (on credit)
$
645,000
Factory payroll cost (paid in cash)
3,285,000
Other factory...
Pro-Weave manufactures stadium blankets by passing the products through a weaving department and a sewing department....
Pro-Weave manufactures stadium blankets by passing the products
through a weaving department and a sewing department. The following
information is available regarding its June inventories:
Beginning Inventory
Ending Inventory
Raw materials inventory
$
146,000
$
217,000
Work in process inventory—Weaving
340,000
380,000
Work in process inventory—Sewing
725,000
940,000
Finished goods inventory
1,416,000
1,456,000
The following additional information describes the company’s
manufacturing activities for June:
Raw materials purchases (on credit)
$
670,000
Factory payroll cost (paid in cash)
3,500,000
Other factory...
Pro-Weave manufactures stadium blankets by passing the products through a weaving department and a sewing department....
Pro-Weave manufactures stadium blankets by passing the products
through a weaving department and a sewing department. The following
information is available regarding its June inventories:
Beginning Inventory
Ending Inventory
Raw materials inventory
$
140,000
$
281,000
Work in process inventory—Weaving
360,000
420,000
Work in process inventory—Sewing
650,000
920,000
Finished goods inventory
1,276,000
1,396,000
The following additional information describes the company’s
manufacturing activities for June:
Raw materials purchases (on credit)
$
520,000
Factory payroll cost (paid in cash)
3,545,000
Other factory...
Pro-Weave manufactures stadium blankets by passing the products through a weaving department and a sewing department....
Pro-Weave manufactures stadium blankets by passing the products
through a weaving department and a sewing department. The following
information is available regarding its June inventories:
Beginning Inventory
Ending Inventory
Raw materials inventory
$
140,000
$
281,000
Work in process inventory—Weaving
360,000
420,000
Work in process inventory—Sewing
650,000
920,000
Finished goods inventory
1,276,000
1,396,000
The following additional information describes the company’s
manufacturing activities for June:
Raw materials purchases (on credit)
$
520,000
Factory payroll cost (paid in cash)
3,545,000
Other factory...
Pro-Weave manufactures stadium blankets by passing the products through a weaving department and a sewing department....
Pro-Weave manufactures stadium blankets by passing the products
through a weaving department and a sewing department. The following
information is available regarding its June inventories:
Beginning Inventory
Ending Inventory
Raw materials
inventory
$
156,000
$
217,000
Work in process
inventory—Weaving
335,000
360,000
Work in process
inventory—Sewing
630,000
975,000
Finished goods inventory
1,306,000
1,346,000
The following additional information describes the company’s
manufacturing activities for June:
Raw materials
purchases (on credit)
$
550,000
Factory wages cost (paid in cash)
3,360,000
Other factory...
Pro-Weave manufactures stadium blankets by passing the products through a weaving department and a sewing department....
Pro-Weave manufactures stadium blankets by passing the products
through a weaving department and a sewing department. The following
information is available regarding its June inventories: Beginning
Inventory Ending Inventory Raw materials inventory $ 138,000 $
277,000 Work in process inventory—Weaving 335,000 350,000 Work in
process inventory—Sewing 630,000 800,000 Finished goods inventory
1,306,000 1,316,000 The following additional information describes
the company’s manufacturing activities for June: Raw materials
purchases (on credit) $ 700,000 Factory wages cost (paid in cash)
3,440,000 Other factory...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Respond to the following in a minimum of 175 words: Discuss what elements should be present...
- 1) The 3rd bright fringe of a double slit interference pattern is 30.0 cm above the...
- A solar cell generates a potential difference of 0.320 V when a 445.0 ? resistor is...
- A ceiling fan consists of a small cylindrical disk with 5 thin rods coming from the...
- You measure the following quantities as A = 1.0 m ± 0.2 m, B = 2.0...
- Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures specialty heavy equipment for...
- When the electricity goes out on your campus, a backup source powers the servers that handle...
ADVERTISEMENT