11-24 Special order, activity-based costing. (CMA, adapted) The Reward One Company manufactures windows. Its manufacturing plant...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
11-24 Special order, activity-based costing. (CMA, adapted) The Reward One Company manufactures windows. Its manufacturing plant has the capacity to produce 12,000 windows each month. Current production and sales are 10,000 windows per month. The company normally charges $250 per window. Cost information for the current activity level is as follows: Variable costs that vary with number of units produced Direct materials Direct manufacturing labor Variable costs (for setups, materials handling, quality control, and so on) that vary with number of batches, 100 batches X $1,500 per batch Fixed manufacturing costs Fixed marketing costs Total costs $ 600,000 700,000 150,000 250,000 400,000 $2,100,000 Reward One has just received a special one-time-only order for 2,000 windows at $225 per window. Accepting the special order would not affect the company's regular business or its fixed costs. Reward One makes windows for its existing customers in batch sizes of 100 windows (100 batches x 100 windows per batch = 10,000 windows). The special order requires Reward One to make the windows in 25 batches of 80 windows. Required 1. Should Reward One accept this special order? Show your calculations. 2. Suppose plant capacity were only 11,000 windows instead of 12,000 windows each month. The special order must either be taken in full or be rejected completely. Should Reward One accept the special order? Show your calculations. 3. As in requirement 1, assume that monthly capacity is 12,000 windows. Reward One is concerned that if it accepts the special order, its existing customers will immediately demand a price discount of $20 in the month in which the special order is being filled. They would argue that Reward One's capacity costs are now being spread over more units and that existing customers should get the benefit of these lower costs. Should Reward One accept the special order under these conditions? Show your calculations. 11-24 Special order, activity-based costing. (CMA, adapted) The Reward One Company manufactures windows. Its manufacturing plant has the capacity to produce 12,000 windows each month. Current production and sales are 10,000 windows per month. The company normally charges $250 per window. Cost information for the current activity level is as follows: Variable costs that vary with number of units produced Direct materials Direct manufacturing labor Variable costs (for setups, materials handling, quality control, and so on) that vary with number of batches, 100 batches X $1,500 per batch Fixed manufacturing costs Fixed marketing costs Total costs $ 600,000 700,000 150,000 250,000 400,000 $2,100,000 Reward One has just received a special one-time-only order for 2,000 windows at $225 per window. Accepting the special order would not affect the company's regular business or its fixed costs. Reward One makes windows for its existing customers in batch sizes of 100 windows (100 batches x 100 windows per batch = 10,000 windows). The special order requires Reward One to make the windows in 25 batches of 80 windows. Required 1. Should Reward One accept this special order? Show your calculations. 2. Suppose plant capacity were only 11,000 windows instead of 12,000 windows each month. The special order must either be taken in full or be rejected completely. Should Reward One accept the special order? Show your calculations. 3. As in requirement 1, assume that monthly capacity is 12,000 windows. Reward One is concerned that if it accepts the special order, its existing customers will immediately demand a price discount of $20 in the month in which the special order is being filled. They would argue that Reward One's capacity costs are now being spread over more units and that existing customers should get the benefit of these lower costs. Should Reward One accept the special order under these conditions? Show your calculations.
Expert Answer:
Answer rating: 100% (QA)
1 Without With One time only One time only Special Order Special Order Difference 10000 windows 1200... View the full answer
Related Book For
Horngrens Cost Accounting A Managerial Emphasis
ISBN: 978-0134475585
16th edition
Authors: Srikant M. Datar, Madhav V. Rajan
Posted Date:
Students also viewed these accounting questions
-
The Reward One Company manufactures windows. Its manufacturing plant has the capacity to produce 12,000 windows each month. Current production and sales are 10,000 windows per month. The company...
-
The Reward One Company manufactures windows. Its manufacturing plant has the capacity to produce 12,000 windows each month. Current production and sales are 10,000 windows per month. The company...
-
In a manufacturing firm, the total number of units produced is given by the Cobb-Douglas production function below: P (x, y, z) = 60 x^1/6 y^1/3 z^1/2 where x is the number of units of labour, y is...
-
How could sales force automation affect salesperson productivity, marketing management, and competitive advantage?
-
Is it possible for functional employees to have performed a job so long or so often that they no longer listen to the instructions given by the project or functional managers?
-
Retention factors for three solutes separated on a C8 nonpolar stationary phase are listed in the table on the next page. Eluent was a 70:30 (vol/vol) mixture of 50 mM citrate buffer (adjusted to pH...
-
a. Defined benefit plans carry with them economic incentive to discriminate against older workers in hiring, while defined contribution plans and cash balance plans are neutral in this regard. b....
-
Crooked River Corporation is preparing its statement of cash flows (indirect method) for the past year. Listed below are items used in preparing the companys statement of cash flows. Specify how each...
-
Troy ( single ) purchased a home in Hopkinton, Massachusetts, on January 1 , 2 0 0 7 , for $ 3 2 0 , 0 0 0 . He sold the home on January 1 , 2 0 2 3 , for $ 3 4 6 , 3 0 0 . How much gain must Troy...
-
Use the option data from July 13, 2009 in the following table to determine the rate Google would have paid if it had issued $128 billion in zero-coupon debt due in January 2011. Suppose Google...
-
Following is the discussion about a fraud case: Dylan worked for a propane gas distributor as an accounting clerk in a small Midwestern town. Last winter, his brother Mike lost his job at the machine...
-
Summarize each of the following laws Title IV Title IX ADEA ADA Equal Pay Act Pregnancy Discrimination Act.
-
Nicholas is keen to apply his financial knowledge to his real-life investment goals. He is currently 19 years of age and wishes to retire from full-time work at the age of 60 with $5 000 000 in his...
-
*Required 1. If a data set consists of 15 values and the sample mean is 10, what will the mean change to if a value of 26 is added to the data set? Enter your answer
-
A contingency plan for Amazon Inc that outlines what steps can be taken to address unforeseen changes to internal or external environments over the coming three years for Amazon. Add references.
-
you will be asked to choose an organization related to the group you attended in your first assignment. For example, if you attended an AA meeting, a related organization might be an institution...
-
Activity A scientist needs to make 5 4 liters of saline solution salt water in which the salt level must be at 28 concentration meaning 28 of the water is salt Unfortunately the scientist only has...
-
The following information is available for Partin Company: Sales $598,000 Sales Returns and Allowances 20,000 Cost of Goods Sold 398,000 Selling Expense 69,000 Administrative Expense 25,000 Interest...
-
Neuro Instruments uses a manufacturing costing system with one direct-cost category (direct materials) and three indirect-cost categories: a. Setup, production-order, and materials-handling costs...
-
Consider E-books again. The controller of E-books reads a widely used textbook that states that "the reciprocal method is conceptually the most defensible." He seeks your assistance. Required: 1....
-
Pineway Electric manufactures electric motors. It competes and plans to grow by selling high-quality motors at a low price and by delivering them to customers in a reasonable time after receiving...
-
Inferring Transactions from Statement of Financial Position Changes Each of the following statement of financial position changes is associated with a particular transaction: YOUDECIDE a. Cash...
-
Transaction Analysis} Goal Systems, a business consulting firm, engaged in the following transactions: a. Issued common shares for \(\$ 50,000\) cash b. Borrowed \(\$ 20,000\) from a bank c....
-
Debit and Credit Effects of Transactions} Mackenzie Corporation was involved in the following transactions during the current year: a. Mackenzie borrowed cash from the local bank on a note payable....
Study smarter with the SolutionInn App