Richmond Production produces tents that it sells for $64 a unit. Operating at capacity, the company...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Richmond Production produces tents that it sells for $64 a unit. Operating at capacity, the company can produce 50,000 tents a year. Costs associated with this level of production and sales are given below: Direct material Direct labour Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative costs Fixed selling and administrative costs Total costs $1.200.000 300,000 100,000 500,000 200.000 400,000 $2.700,000 The Australian Air Force Cadets would like to make a one-time-only purchase of 10.000 tents for its outreach programs. The air force cadets would pay a fee of $8 per tent, and in addition it would reimburse Richmond for its manufacturing costs (both fixed and variable). The company would not incur its usual variable selling expenses with this special order. Required: (a) Assuming that Richmond currently produces and sell 40,000 tents a year, should the company accept this special order? Base your answer on the extent to which the special order either increases or decreases the total net operating income of Richmond Production. Show your calculations clearly and logically. If Richmond is already operating at capacity and could sell 50.000 tents through regular channels, should the company accept this special order? Base your answer on the extent to which the special order either increases or decreases the total net operating income of Richmond Production. Show your calculations clearly and logically. (b) (c) In a decision about whether to accept or reject a special order, give two reasons why it is important to know if this is a "one-off" decision or not. (d) Provide and explain three strategic issues that should be considered in making the decision for a special order? Richmond Production produces tents that it sells for $64 a unit. Operating at capacity, the company can produce 50,000 tents a year. Costs associated with this level of production and sales are given below: Direct material Direct labour Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative costs Fixed selling and administrative costs Total costs $1.200.000 300,000 100,000 500,000 200.000 400,000 $2.700,000 The Australian Air Force Cadets would like to make a one-time-only purchase of 10.000 tents for its outreach programs. The air force cadets would pay a fee of $8 per tent, and in addition it would reimburse Richmond for its manufacturing costs (both fixed and variable). The company would not incur its usual variable selling expenses with this special order. Required: (a) Assuming that Richmond currently produces and sell 40,000 tents a year, should the company accept this special order? Base your answer on the extent to which the special order either increases or decreases the total net operating income of Richmond Production. Show your calculations clearly and logically. If Richmond is already operating at capacity and could sell 50.000 tents through regular channels, should the company accept this special order? Base your answer on the extent to which the special order either increases or decreases the total net operating income of Richmond Production. Show your calculations clearly and logically. (b) (c) In a decision about whether to accept or reject a special order, give two reasons why it is important to know if this is a "one-off" decision or not. (d) Provide and explain three strategic issues that should be considered in making the decision for a special order?
Expert Answer:
Answer rating: 100% (QA)
Requirement A The company is currently producing 40000 tents the maximum capacity of the company is ... View the full answer
Related Book For
Fundamental Managerial Accounting Concepts
ISBN: 978-0078110894
6th Edition
Authors: Edmonds, Tsay, olds
Posted Date:
Students also viewed these accounting questions
-
Hunt Manufacturing Company makes tents that it sells directly to camping enthusiasts through a mail-order marketing program. The company pays a quality control expert $72,000 per year to inspect...
-
Spring Manufacturing Company makes tents that it sells directly to camping enthusiasts through a mail-order marketing program. The company pays a quality control expert $108,000 per year to inspect...
-
Hunt Manufacturing Company makes tents that it sells directly to camping enthusiasts through a mail-order marketing program. The company pays a quality control expert $72,000 per year to inspect...
-
Match the following ratios with the appropriate formula. Ratio or Rate Formula a. Income from operations Interest expense Acid-test Total liabilities Stockholders' equity Current b. Net income-...
-
Independent samples of sizes nA = 2 and nB = 2 are taken from two continuous populations. (a) Enumerate all possible collections of ranks associated with population A. Also attach probabilities to...
-
You recently began a job as an accounting intern at Rocky Adventures. Your first task was to help prepare the cash budget for February and March. Unfortunately, the computer with the budget file...
-
Provide an example for actor generalization. What is the significance of generalizing or specializing actors?
-
Rivera, Sampson, and Elliott are partners in a commercial plumbing business. Rivera and Sampson have also started another contracting company and have cash flow needs which require periodic...
-
Given the following information, calculate the weighted average cost of capital for Puppet Corporation. (Round Intermediate calculations to 2 decimal places. Round the final answers to 2 decimal...
-
Makayla Jennings is the general manager at the Hampworth Inn. Le'Veon is the property's front office manager (FOM) and Latisha is the hotel's Director of Sales and Marketing (DOSM). All three serve...
-
Using the information below you are required to complete the Consolidation Journal as at 30 June 2016 according to organizational policy and procedures applicable to Ryan Limited listed above. AASB...
-
Discuss Dominican co-culture and your relation to it as a Dominican.
-
Product or Service Chosen for Marketing Plan: Provide a brief description of the product and this product you choose is exit. 1. External Influences : Regulatory forces ? economic trends? social...
-
Consider a three-year corporate bond selling for $1,052.49, paying interest annually, with a face value of $1,000, a coupon rate of 9%, and a YTM of 7%. What is the duration of this bond?
-
1. Visit the Virtual Library's Films On Demand video database and search for the video "Nurturing Leadership." 2. Write an essay of at least 700 words, with the following format: 3. Introduction:...
-
Define and describe the processes of project communication management according to the extract above. Describe the meaning of communication to implemented projects and what the project managers must...
-
In the Mensa recommended plan, what rate of return is automatically assigned to the account used to fund the emergency goal? Cash equivalent rate of return. The rate of return based on the asset...
-
If a test has high reliability. O the test measures what the authors of the test claim it measures O people who take the same test twice get approximately the same scores both times O scores on the...
-
Preparing a statement of cash flows The following information can be obtained by examining a company's balance sheet and income statement information. a. Decreases in noncash current asset account...
-
When would the customer be willing to pay a premium price for a product or service? What pricing strategy would be appropriate under these circumstances?
-
ASAP Delivery is a small company that transports business packages between San Francisco and Los Angeles. It operates a fleet of small vans that moves packages to and from a central depot within each...
-
If you look at the light spectrum reflected from the surface of a DVD compared to the spectrum reflected from the surface of a CD, youll see that the rainbows from the DVD are more spread out, with...
-
Increasing the density of a material tends to increase the index of refraction. Does light travel faster in seawater or in fresh water?
-
Antireflection coatings for glass usually have an index of refraction that is less than that of glass. Explain how this permits a thinner coating.
Study smarter with the SolutionInn App