Question
In: Accounting
Delta Company produces a single product. The cost of producing and selling a single unit of...
Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company’s normal activity level of 104,400 units per year is:
| Direct materials | $ | 1.80 | |
| Direct labor | $ | 2.00 | |
| Variable manufacturing overhead | $ | 0.60 | |
| Fixed manufacturing overhead | $ | 3.95 | |
| Variable selling and administrative expenses | $ | 1.90 | |
| Fixed selling and administrative expenses | $ | 1.00 | |
The normal selling price is $22.00 per unit. The company’s capacity is 118,800 units per year. An order has been received from a mail-order house for 1,200 units at a special price of $19.00 per unit. This order would not affect regular sales or the company’s total fixed costs.
Required:
1. What is the financial advantage (disadvantage) of accepting the special order?
2. As a separate matter from the special order, assume the company’s inventory includes 1,000 units of this product that were produced last year and that are inferior to the current model. The units must be sold through regular channels at reduced prices. The company does not expect the selling of these inferior units to have any effect on the sales of its current model. What unit cost is relevant for establishing a minimum selling price for these units?
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Delta Company produces a single product. The cost of producing and selling a single unit of...
Delta Company produces a single product. The cost of producing
and selling a single unit of this product at the company’s normal
activity level of 103,200 units per year is:
Direct
materials
$
2.30
Direct
labor
$
3.00
Variable
manufacturing overhead
$
0.90
Fixed
manufacturing overhead
$
4.45
Variable selling
and administrative expenses
$
1.20
Fixed selling
and administrative expenses
$
2.00
The normal selling price is $22.00 per unit. The company’s
capacity is 139,200 units per year. An order...
Delta Company produces a single product. The cost of producing and selling a single unit of...
Delta Company produces a single product. The cost of producing
and selling a single unit of this product at the company’s normal
activity level of 104,400 units per year is:
Direct materials
$
1.50
Direct labor
$
3.00
Variable manufacturing
overhead
$
0.70
Fixed manufacturing
overhead
$
4.15
Variable selling and
administrative expenses
$
1.50
Fixed selling and administrative
expenses
$
2.00
The normal selling price is $23.00 per unit. The company’s
capacity is 136,800 units per year. An order...
Delta Company produces a single product. The cost of producing and selling a single unit of...
Delta Company produces a single product. The cost of producing
and selling a single unit of this product at the company’s normal
activity level of 86,400 units per year is:
Direct materials
$
2.10
Direct labor
$
2.00
Variable manufacturing
overhead
$
.60
Fixed manufacturing
overhead
$
4.15
Variable selling and
administrative expense
$
1.50
Fixed selling and administrative
expense
$
1.00
The normal selling price is $18 per unit. The company’s capacity
is 109,200 units per year. An order...
Delta Company produces a single product. The cost of producing and selling a single unit of...
Delta Company produces
a single product. The cost of producing and selling a single unit
of this product at the company’s normal activity level of 98,400
units per year is:
Direct
materials
$
2.50
Direct
labor
$
3.00
Variable
manufacturing overhead
$
1.00
Fixed
manufacturing overhead
$
4.45
Variable selling
and administrative expenses
$
1.30
Fixed selling
and administrative expenses
$
2.00
The normal selling
price is $18.00 per unit. The company’s capacity is 128,400 units
per year. An order...
Delta Company produces a single product. The cost of producing and selling a single unit of...
Delta Company produces a single product. The cost of producing
and selling a single unit of this product at the company’s normal
activity level of 102,000 units per year is: Direct materials $
1.70 Direct labor $ 4.00 Variable manufacturing overhead $ 0.70
Fixed manufacturing overhead $ 4.45 Variable selling and
administrative expenses $ 1.60 Fixed selling and administrative
expenses $ 3.00 The normal selling price is $24.00 per unit. The
company’s capacity is 132,000 units per year. An order...
Delta Company produces a single product. The cost of producing and selling a single unit of...
Delta Company produces a single product. The cost of producing
and selling a single unit of this product at the company’s normal
activity level of 103,200 units per year is:
Direct materials
$
1.70
Direct labor
$
3.00
Variable manufacturing overhead
$
0.90
Fixed manufacturing overhead
$
3.35
Variable selling and administrative expenses
$
1.90
Fixed selling and administrative expenses
$
2.00
The normal selling price is $19.00 per unit. The company’s
capacity is 127,200 units per year. An order...
Delta Company produces a single product. The cost of producing and selling a single unit of...
Delta Company produces a single product. The cost of producing
and selling a single unit of this product at the company’s normal
activity level of 86,400 units per year is:
Direct materials
$
2.10
Direct labor
$
2.00
Variable manufacturing overhead
$
0.50
Fixed manufacturing overhead
$
5.15
Variable selling and administrative expenses
$
1.30
Fixed selling and administrative expenses
$
1.00
The normal selling price is $21.00 per unit. The company’s
capacity is 102,000 units per year. An order...
Delta Company produces a single product. The cost of producing and selling a single unit of...
Delta Company produces a single product. The cost of producing
and selling a single unit of this product at the company’s normal
activity level of 103,200 units per year is:
Direct materials
$
1.80
Direct labor
$
4.00
Variable manufacturing
overhead
$
0.90
Fixed manufacturing
overhead
$
5.05
Variable selling and
administrative expenses
$
2.10
Fixed selling and administrative
expenses
$
3.00
The normal selling price is $23.00 per unit. The company’s
capacity is 126,000 units per year. An order...
Delta Company produces a single product. The cost of producing and selling a single unit of...
Delta Company produces a single product. The cost of producing
and selling a single unit of this product at the company’s normal
activity level of 98,400 units per year is:
Direct materials
$
1.90
Direct labor
$
3.00
Variable manufacturing overhead
$
0.50
Fixed manufacturing overhead
$
4.05
Variable selling and administrative expenses
$
1.70
Fixed selling and administrative expenses
$
2.00
The normal selling price is $22.00 per unit. The company’s
capacity is 128,400 units per year. An order...
Delta Company produces a single product. The cost of producing and selling a single unit of...
Delta Company produces a single product. The cost of producing
and selling a single unit of this product at the company’s normal
activity level of 60,000 units per year is:
Direct materials
$
5.10
Direct labor
$
3.80
Variable manufacturing overhead
$
1.00
Fixed manufacturing overhead
$
4.20
Variable selling and administrative expense
$
1.50
Fixed selling and administrative expense
$
2.40
The normal selling price is $21 per unit. The company’s capacity
is 75,000 units per year. An order...
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