(15 points) The Landyachtz Corporation produces a single product - its famous ATV skateboard. The company...

 

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(15 points) The Landyachtz Corporation produces a single product - its famous ATV skateboard. The company has the capacity to produce 50,000 Skateboards each year. If Landyachtz produces at capacity, the per unit costs to produce and sell one skateboard are as follows: Per Unit Costs Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense $50 $18 $7 $10 $16 $3 $104 Total cost per unit The regular selling price for one skateboard is $125. A special order has been received by Landyachtz from Burton Corporation to purchase 5,000 skateboards next year at $90 per unit. If this special order is accepted, the variable selling expense will be reduced by 75%. However, Landyachtz will have to purchase a specialized machine to engrave the Barton name on each Skateboard in the special order. This machine will cost $10,000 and it will have no use after the special order is filled. The total fixed manufacturing overhead and fixed selling expenses would be unaffected by this special order. Assume that direct labor is a variable cost. Show your calculations and relevant units. Assume Landyachtz anticipates selling only 40,000 units of skateboard to regular customers next year. What is the annual financial advantage (disadvantage) for the company as a result of accepting this special order? (15 points) The Landyachtz Corporation produces a single product - its famous ATV skateboard. The company has the capacity to produce 50,000 Skateboards each year. If Landyachtz produces at capacity, the per unit costs to produce and sell one skateboard are as follows: Per Unit Costs Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense $50 $18 $7 $10 $16 $3 $104 Total cost per unit The regular selling price for one skateboard is $125. A special order has been received by Landyachtz from Burton Corporation to purchase 5,000 skateboards next year at $90 per unit. If this special order is accepted, the variable selling expense will be reduced by 75%. However, Landyachtz will have to purchase a specialized machine to engrave the Barton name on each Skateboard in the special order. This machine will cost $10,000 and it will have no use after the special order is filled. The total fixed manufacturing overhead and fixed selling expenses would be unaffected by this special order. Assume that direct labor is a variable cost. Show your calculations and relevant units. Assume Landyachtz anticipates selling only 40,000 units of skateboard to regular customers next year. What is the annual financial advantage (disadvantage) for the company as a result of accepting this special order?

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