Caron Manufacturing has the capacity to produce 20,000 units per year. Its predicted operations for the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Caron Manufacturing has the capacity to produce 20,000 units per year. Its predicted operations for the year are as follows: Sales (15,000 units @ $50 each) $750,000 $20 per unit $50,000 Manufacturing costs: Variable Fixed Marketing and administrative costs: Variable Fixed The accounting department has prepared the following projected income statement for the coming year for your use in making decisions. Sales Variable costs: Manufacturing ($20 x 15,000) Marketing ($4 x 15,000) Contribution margin $4 per unit $30,000 Fixed costs: Manufacturing Marketing Operating profit $300,000 60,000 $50,000 30,000 $750,000 360,000 $390,000 80,000 $310,000 Required: a) Should the company accept a special order for 4,000 units at a selling price of $30? Assuming that there are no variable marketing and administrative costs for this order and that regular sales will not be affected, what is the impact of this decision on company profits? b) Suppose there was a one-time setup fee of $25,000 for the preceding order. Should the special order be accepted? Why? c) What other factors should be considered and how would they impact your decision to accept the special order? Caron Manufacturing has the capacity to produce 20,000 units per year. Its predicted operations for the year are as follows: Sales (15,000 units @ $50 each) $750,000 $20 per unit $50,000 Manufacturing costs: Variable Fixed Marketing and administrative costs: Variable Fixed The accounting department has prepared the following projected income statement for the coming year for your use in making decisions. Sales Variable costs: Manufacturing ($20 x 15,000) Marketing ($4 x 15,000) Contribution margin $4 per unit $30,000 Fixed costs: Manufacturing Marketing Operating profit $300,000 60,000 $50,000 30,000 $750,000 360,000 $390,000 80,000 $310,000 Required: a) Should the company accept a special order for 4,000 units at a selling price of $30? Assuming that there are no variable marketing and administrative costs for this order and that regular sales will not be affected, what is the impact of this decision on company profits? b) Suppose there was a one-time setup fee of $25,000 for the preceding order. Should the special order be accepted? Why? c) What other factors should be considered and how would they impact your decision to accept the special order?
Expert Answer:
Answer rating: 100% (QA)
Sales Variable Cost Manufacturing Marketing Total V... View the full answer
Related Book For
Managerial Accounting A Focus on Ethical Decision Making
ISBN: 978-0324663853
5th edition
Authors: Steve Jackson, Roby Sawyers, Greg Jenkins
Posted Date:
Students also viewed these accounting questions
-
The Belik Company has the capacity to produce 5,000 units per year. Its predicted operations for the year are as follows: Sales (4,000 units @ $ 20 each) ......... $ 80,000 Manufacturing costs:...
-
The Mead Meals on Wheels Center (MMWC) provides meals every day to the homebound elderly. The city of Wabash pays MMWC $ 32 per week for each person it serves. There is no shortage of demand for...
-
The Award Plus Company manufactures medals for winners of athletic events and other contests. Its manufacturing plant has the capacity to produce 10,000 medals each month. Current production and...
-
kindly interpret the R squared In order to test its job candidates' technical skills, a company creates a timed Excel test (in minutes) to be completed during the interview. The company asks its...
-
Accurate airflow measurement requires straight unobstructed pipe for a minimum of 10 diameters upstream and 5 diameters downstream of the measuring device. In a field application, physical...
-
What is differential pricing? In what ways can it be achieved?
-
The following are independent situations for which ^you will recommend an appropriate auditor's report: 1. ^Subsequent to the date of the financial statements as part of the post-balance sheet date...
-
A group of college students is planning a camping trip during the upcoming break. The group must hike several miles through the woods to get to the campsite, and anything that is needed on this trip...
-
PLEASE ANSWER THE FOLLOWING QUESTION...Jed's Cars, Inc., just purchased a $296,000 machine to producetoy cars. The machine will be fully depreciated by thestraight-line method over its four-year ec 2...
-
Last August, Malcolm (who is single) moved out of his rented apartment in Toronto, Ontario, to move to Vancouver, British Columbia, where he now lives and works. Malcolm has two T4s, one from Ontario...
-
ABC; pricing Chester Inc. has identified activity centers to which overhead costs are assigned. The cost pool amounts for these centers and their selected activity drivers for the year follow....
-
Explain the differences between first-fit, best-fit, and worst-fit memory allocation strategies. What are the trade-offs in terms of memory fragmentation and allocation speed ?
-
Anderson Enterprises currently has $800 in cash. The company owes $2,400 to suppliers for merchandise and $9,000 to the bank for a long-term loan. Customers owe Anderson's $3,800. The inventory has a...
-
Guitars by Dave crafts an acoustic guitar that sells for $2,500. The variable costs per guitar are $1,750 and the total fixed costs are $180,000. What is the total dollar sales required to earn a...
-
Antique Dealer has a mint condition, in-the-box, never opened Stinky Pete the Prospector doll from the popular 1950s television show, Woody's Roundup . Collector, who is a big fan of the show,...
-
Describe common garbage collection algorithms such as mark-and-sweep, generational, and reference counting. How do they impact performance and memory efficiency in managed runtimes?
-
A USD1000.00 bond pays USD25.00 annually forever. What is its priceif the current interest rate is 2.00%? 2 answers
-
You are interested in investing and are considering a portfolio comprised of the following two stocks. Their estimated returns under varying market conditions are provided: (note: it is difficult to...
-
Under absorption costing, how can net income increase without sales increasing?
-
Define strategic and operational planning.
-
State Hospital is considering outsourcing its maintenance work. The total labor cost for the maintenance department is $200,000, and the hospital has an offer from Jenny Maintenance to provide the...
-
On July 1, 2020, West Company purchased for cash, eight \(\$ 10,000\) bonds of North Corporation to yield \(10 \%\). The bonds pay \(9 \%\) interest, payable on a semiannual basis each July 1 and...
-
Repeat Exercise 14-43, assuming discounts and premiums are amortized using the straight-line interest method. Exercise 14-43 On July 1, 2020, West Company purchased for cash, eight \(\$ 10,000\)...
-
On January 1, 2020, Lazer Inc. purchased for cash, ten \(\$ 1,000,4 \%\) bonds of Star Corp. at par. The bond interest is paid annually on January 1 of each year, and the bond maturity date is...
Study smarter with the SolutionInn App