Alpine produces a single product. The company's March 2018 income statement is as follows: Sales (600...

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Alpine produces a single product. The company's March 2018 income statement is as follows: Sales (600 x $60) Cost of goods sold Gross profit $36,000 - 33,000 $3,000 2,000 Selling and administrative Net income $ 1,000 There were no beginning or ending inventories of work-in-process or finished goods. Alpine's full manufacturing costs were as follows: Direct materials (600 units x $10) $ 6,000 Direct labor (600 units x $16)9,600 Variable manufacturing overhead (600 units x $9) 5,400 Fixed manufacturing overhead Total $33,000 Average cost per unit $55 12,000 Selling and administrative expenses are all fixed. Alpine just received a special order from a firm in Canada to purchase 450 units at $55 each. The order will not affect the selling price to regular customers. Required: a. Prepare a differential analysis of the relevant costs and revenues associated with the decision to accept or reject the special order, assuming Regal has excess capacity. b. Determine the net advantage or disadvantage (profit increase or decrease) of accepting the order, assuming Regal does not have excess capacity. Alpine produces a single product. The company's March 2018 income statement is as follows: Sales (600 x $60) Cost of goods sold Gross profit $36,000 - 33,000 $3,000 2,000 Selling and administrative Net income $ 1,000 There were no beginning or ending inventories of work-in-process or finished goods. Alpine's full manufacturing costs were as follows: Direct materials (600 units x $10) $ 6,000 Direct labor (600 units x $16)9,600 Variable manufacturing overhead (600 units x $9) 5,400 Fixed manufacturing overhead Total $33,000 Average cost per unit $55 12,000 Selling and administrative expenses are all fixed. Alpine just received a special order from a firm in Canada to purchase 450 units at $55 each. The order will not affect the selling price to regular customers. Required: a. Prepare a differential analysis of the relevant costs and revenues associated with the decision to accept or reject the special order, assuming Regal has excess capacity. b. Determine the net advantage or disadvantage (profit increase or decrease) of accepting the order, assuming Regal does not have excess capacity.

Answer rating: 100% (QA)

To analyze Alpines decision to accept or reject the special order we first need to understand the differential or incremental costs and revenues that ... View the full answer