A firm makes 395,000 motor bikes and sales at $25 each. Their last operating statement was as
Question:
A firm makes 395,000 motor bikes and sales at $25 each. Their last operating statement was as follows Sales 2,600,000 Direct Materials 625,000 Direct Labour 850,000 Direct Expenses 445000 Fixed costs 650,000 A contract has been offered to sell an additional 150,000 thermostats at $18 each. Acceptance of this contract would increase fixed costs by $70,000 and would mean paying an overtime premium of 22% for the extra labour required. However because of bulk purchasing a discount of 6.5 % could be obtained for all material purchases.
1. Calculate the contribution and net profit b. Prepare-a differential cost statement.
Management Accounting
ISBN: 978-0132570848
6th Canadian edition
Authors: Charles T. Horngren, Gary L. Sundem, William O. Stratton, Phillip Beaulieu