a) Viking Corporation's variable cost per unit produced is $100. Wholesaler Y offers to buy 2,000...

 

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a) Viking Corporation's variable cost per unit produced is $100. Wholesaler Y offers to buy 2,000 additional units at $120 each. Wholesaler Z proposes to buy 1,500 additional units at $140 per unit. Viking has enough excess capacity to produce one but not both of the orders. Fixed costs are not affected by accepting either offer. Required: Which offer should Viking accept and why? (4 marks) b) Colin O'Shea has a carpentry shop that employs 4 carpenters. Colin received an order for 1,000 coffee tables. The coffee tables have a round tabletop and four decorative legs. An offer for $500 per table was received. Colin found an unfinished round tabletop that he could buy for $50 each. The quantitative cost data to make the tabletop is shown below: Direct materials $10 Direct labor 35 Variable overhead 10 Fixed overhead 7 Required: What qualitative factors would Colin consider before he decides to buy the tabletop or Recta ular Snip make it? (Hint: No calculations required] (3 marks) a) Viking Corporation's variable cost per unit produced is $100. Wholesaler Y offers to buy 2,000 additional units at $120 each. Wholesaler Z proposes to buy 1,500 additional units at $140 per unit. Viking has enough excess capacity to produce one but not both of the orders. Fixed costs are not affected by accepting either offer. Required: Which offer should Viking accept and why? (4 marks) b) Colin O'Shea has a carpentry shop that employs 4 carpenters. Colin received an order for 1,000 coffee tables. The coffee tables have a round tabletop and four decorative legs. An offer for $500 per table was received. Colin found an unfinished round tabletop that he could buy for $50 each. The quantitative cost data to make the tabletop is shown below: Direct materials $10 Direct labor 35 Variable overhead 10 Fixed overhead 7 Required: What qualitative factors would Colin consider before he decides to buy the tabletop or Recta ular Snip make it? (Hint: No calculations required] (3 marks)

Answer rating: 100% (QA)

a Y Z Offer price 120 140 Less variable cost 100 100 Profitloss per unit 20 40 Num... View the full answer