Starlord company makes and sells a product that regularly sell for $39.85 each. The following information...

Starlord company makes and sells a product that regularly sell for $39.85 each.

The following information is available for the current year:

Annual maximum capacity in units	6,800
Current annual production in units	6,200
Budgeted absorption cost per unit:
Direct materials	$9.95
Direct labor	$2.65
Manufacturing overhead (70% variable)	$3.40

A new customer approached the company with a one-time all-or-nothing order for 900 units. The special-order units are identical to the regular ones, with one exception: the customer would like their business logo engraved on each unit. It will cost $6.5 to engrave the logo.

Q.) The minimum total sales revenue from the special order that would be acceptable to the company is:

A.) $

Solutions

Expert Solution

Thank you for your patience. Please give positive ratings so I can keep answering. It would help me a lot. Please comment if you have any query. Thanks!

Star lord Company

Minimum total sales revenue should be contribution lost from loss of sale to regular customers plus relevant costs.

Sell price	39.85
Less:
Direct materials	9.95
Direct labor	2.65
Variable Manufacturing overhead	2.38	This is $ 3.4*70%
Total variable costs	14.98
Contribution per unit	24.87

Production capacity	6,800.00
Units sold to external customers	6,200.00
Balance	600.00
Demand to be fulfilled	900.00
Units lost of external customer	300.00
Contribution lost	7,461.00
Contribution lost per unit	8.29	This is $ 7,461/ 900 units.
Add: Variable costs per unit	14.98
Add: Cost of logo per unit	6.50
Relevant price per unit	29.77
Minimum total sales revenue	26,793.00
So Minimum total sales revenue should be $ 26,793.

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Simun Company makes and sells a product that regularly sell for $38.95 each. The following information...

Simun Company makes and sells a product that regularly sell for $38.95 each. The following information is available for the current year: Annual maximum capacity in units 6,500 Current annual production in units 6,200 Budgeted absorption cost per unit: Direct materials $9.95 Direct labor $2.65 Manufacturing overhead (70% variable) $3.40 A new customer approached the company with a one-time all-or-nothing order for 700 units. The special-order units are identical to the regular ones, with one exception: the customer would like...

Spider Company makes and sells a product that regularly sell for $38.95 each. The following information...

Spider Company makes and sells a product that regularly sell for $38.95 each. The following information is available for the current year: Annual maximum capacity in units 6,500 Current annual production in units 6,200 Budgeted absorption cost per unit: Direct materials $9.95 Direct labor $2.65 Manufacturing overhead (70% variable) $3.40 A new customer approached the company with a one-time all-or-nothing order for 700 units. The special-order units are identical to the regular ones, with one exception: the customer would like...

Sireli Company makes and sells a product that regularly sell for $38.95 each. The following information...

Sireli Company makes and sells a product that regularly sell for $38.95 each. The following information is available for the current year: Annual maximum capacity in units 6,500 Current annual production in units 6,200 Budgeted absorption cost per unit: Direct materials $9.95 Direct labor $2.65 Manufacturing overhead (70% variable) $3.40 A new customer approached the company with a one-time all-or-nothing order for 800 units. The special-order units are identical to the regular ones, with one exception: the customer would like...

Your Company makes and sells portable televisions. Each television regularly sells for $210. The following cost...

Your Company makes and sells portable televisions. Each television regularly sells for $210. The following cost data per television is based on a full capacity of 10,000 televisions produced each period. Direct materials $80 Direct labor $60 Manufacturing overhead (70% variable and 30% fixed) $40 Your Company has received a special order for a sale of 2,000 televisions to an overseas customer for $195 per set. The only selling costs that would be incurred on this order would...

Landor Appliance Corporation makes and sells electric fans. Each fan regularly sells for $32. The following...

Landor Appliance Corporation makes and sells electric fans. Each fan regularly sells for $32. The following cost data per fan is based on a full capacity of 160,000 fans produced each period. Direct materials$9Direct labor$9Manufacturing overhead (50% variable and 50% unavoidable fixed)$6 A special order has been received by Landor for a sale of 30,000 fans to an overseas customer. The only selling costs that would be incurred on this order would be $3 per fan for shipping. Landor is...

Landor Appliance Corporation makes and sells electric fans. Each fan regularly sells for $48. The following...

Landor Appliance Corporation makes and sells electric fans. Each fan regularly sells for $48. The following cost data per fan is based on a full capacity of 151,000 fans produced each period. Direct materials $ 7 Direct labor $ 9 Manufacturing overhead (50% variable and 50% unavoidable fixed) $ 6 A special order has been received by Landor for a sale of 25,000 fans to an overseas customer. The only selling costs that would be incurred on this order would...

Walsh company manufactures and sells one product. The following information pertains to each of the company...

Walsh company manufactures and sells one product. The following information pertains to each of the company s first two years of operations. Direct materials. 25$ Direct labor. 10$ Variable manufacturing overhead 4$ Variable selling and administrative. 3$ Fixed manufacturing overhead. 240000$ Fixed selling and administrative expenses. 60000$ During its first year of operations , Walsh produced 50000 units and sold 40000 units. During its second year of operations , it produced 40000 units and sold 50000 units. The selling price...

49. The Arkansas Company makes and sells a product called Product K. Each unit of Product...

49. The Arkansas Company makes and sells a product called Product K. Each unit of Product K sells for $25 dollars and has a unit variable cost of $19. The company has budgeted the following data for November: Sales of $1,162,200, all in cash. A cash balance on November 1 of $49,100. Cash disbursements (other than interest) during November of $1,170,000. A minimum cash balance on November 30 of $62,000. If necessary, the company will borrow cash from a bank....

Haas Company manufactures and sells one product. The following information pertains to each of the company�s...

Haas Company manufactures and sells one product. The following information pertains to each of the company�s first three years of operations: Variable costs per unit: Manufacturing: Direct materials $30 Direct labor $22 Variable manufacturing overhead $6 Variable selling and administrative $2 Fixed costs per year: Fixed manufacturing overhead $ 540,000 Fixed selling and administrative expenses $ 240,000 During its first year of operations, Haas produced 60,000 units and sold 60,000 units. During its second year...

Walsh Company manufactures and sells one product. The following information pertains to each of the company’s...

Walsh Company manufactures and sells one product. The following information pertains to each of the company’s first two years of operations: Variable costs per unit: Manufacturing: Direct materials $ 20 Direct labor $ 13 Variable manufacturing overhead $ 4 Variable selling and administrative $ 3 Fixed costs per year: Fixed manufacturing overhead $ 320,000 Fixed selling and administrative expenses $ 70,000 During its first year of operations, Walsh produced 50,000 units and sold 40,000 units. During its second year of...

Subjects