At present, Brackley Co.'s marketing and sales activities are only in Ontario and western Quebec. A...

 

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At present, Brackley Co.'s marketing and sales activities are only in Ontario and western Quebec. A grocery chain in Manitoba has asked them to supply 50,000 pies per month at a price of $2 per pie. The marketing manager thinks that the company should refuse the contract because $2 is so far below its normal selling price of $3. The production manager thinks that the company should accept the order as there is spare capacity in the plant, and the variable selling costs (delivery and commission) would not be incurred in respect of this order. Required (a) Should Brackley Co. accept the order or not? (b) If Brackley Co. had no spare capacity in the plant, would the answer be the same? Scenario #2 The following information pertains to Problems #5 and #6. Fuel Inc. sells gas, diesel, and propane. The income statement for a recent month was as follows: Fuel Inc. Income Statement Recent Month Gas Diesel Propane $ 75,000 50,000 $ 25,000 Total $ 650,000 325,000 $ 325,000 $ 275,000 125,000 $ 150,000 $1,000,000 500.000 $ 500,000 Sales revenue Direct materials Gross margin Overhead expenses (all fixed cost) Operating income 260,000 $ 65,000 110,000 40,000 30,000 $ (5,000) 400,000 $100,000 At present, Brackley Co.'s marketing and sales activities are only in Ontario and western Quebec. A grocery chain in Manitoba has asked them to supply 50,000 pies per month at a price of $2 per pie. The marketing manager thinks that the company should refuse the contract because $2 is so far below its normal selling price of $3. The production manager thinks that the company should accept the order as there is spare capacity in the plant, and the variable selling costs (delivery and commission) would not be incurred in respect of this order. Required (a) Should Brackley Co. accept the order or not? (b) If Brackley Co. had no spare capacity in the plant, would the answer be the same? Scenario #2 The following information pertains to Problems #5 and #6. Fuel Inc. sells gas, diesel, and propane. The income statement for a recent month was as follows: Fuel Inc. Income Statement Recent Month Gas Diesel Propane $ 75,000 50,000 $ 25,000 Total $ 650,000 325,000 $ 325,000 $ 275,000 125,000 $ 150,000 $1,000,000 500.000 $ 500,000 Sales revenue Direct materials Gross margin Overhead expenses (all fixed cost) Operating income 260,000 $ 65,000 110,000 40,000 30,000 $ (5,000) 400,000 $100,000

Answer rating: 100% (QA)

Based on the information available in the question we can answer as follows Requirement 1 Since Brac... View the full answer