Edwards Arthur Juda Sunglasses sell for about $154 per pair. Suppose the company incurs the following...

   

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Edwards Arthur Juda Sunglasses sell for about $154 per pair. Suppose the company incurs the following average costs per pair: ¹(Click the icon to view the cost information.) Arthur Juda has enough idle capacity to accept a one-time-only special order from Water Glasses for 21,000 pairs of sunglasses at $80 per pair. Arthur Juda will not incur any variable marketing expenses for the order. Read the requirements². TSRIGHTS Requirement 1. How would accepting the order affect Arthur Juda's operating income? In addition to the special order's effect on profits, what other (longer-term qualitative) factors should Arthur Juda's managers consider in deciding whether to accept the order? Prepare an incremental analysis to determine the special order's effect on operating income. (Enter a "0" for any zero balances. Use parentheses or a minus sign to indicate a decrease in operating income from the special order.) Incremental Analysis of Special Sales Order Decision Revenue from special order Less variable expense associated with the order: Variable manufacturing costs Contribution margin Per Unit Total Order (21,000 units) Less: Additional fixed expenses associated with the order Increase (decrease) in operating income from the special order In addition to determining the special order's effect on operating profits, Juda's managers also should consider the following: In addition to determining the special order's effect on operating profits, Juda's managers also should consider the following: A. Will Arthur Juda's other customers find out about the lower sale price Arthur Juda offered to Water Glasses? If so, wi B. Will lowering the sale price tarnish Arthur Juda's image as a high-quality brand? C. How will Arthur Juda's competitors react? Will they retaliate by cutting their prices and starting a price war? D. All of the above E. None of the above A Requirement 2. Arthur Juda's marketing manager, Jim Revo, argues against accepting the special order because the offer price of $80 is less than Arthur Juda's $89 cost to make the sunglasses. Revo asks you, as one of Arthur Juda's staff accountants, to explain whether his analysis is correct. When deciding whether to accept a special order, we should compare the extra revenues we will receive against the Costs that we will incur whether or not we fill the order are (2) to our decision. This is (1) why comparing the $80 price Water Glasses offered us with our $89 total cost of making and selling the sunglasses is (3) 1: Data Table Direct materials.. Direct labor.. Variable manufacturing overhead. Variable marketing expenses Fixed manufacturing overhead (1) $ Total cost * $2,100,000 total fixed manufacturing overhead + 105,000 pairs of sunglasses ............ $ extra costs we will incur to fill the order. extra fixed costs we will incur to fill the order. total costs of making the sunglasses. (2) 41 14 10 2: Requirements 1. How would accepting the order affect Arthur Juda's operating income? In addition to the special order's effect on profits, what other (longer-term qualitative) factors should Arthur Juda's managers consider in deciding whether to accept the order? irrelevant (3) relevant 4 20 2. Arthur Juda's marketing manager, Jim Revo, argues against accepting the special order because the offer price of $80 is less than Arthur Juda's $89 cost to make the sunglasses. Revo asks you, as one of Arthur Juda's staff accountants, to explain whether his analysis is correct. 89 correct misleading Edwards Arthur Juda Sunglasses sell for about $154 per pair. Suppose the company incurs the following average costs per pair: ¹(Click the icon to view the cost information.) Arthur Juda has enough idle capacity to accept a one-time-only special order from Water Glasses for 21,000 pairs of sunglasses at $80 per pair. Arthur Juda will not incur any variable marketing expenses for the order. Read the requirements². TSRIGHTS Requirement 1. How would accepting the order affect Arthur Juda's operating income? In addition to the special order's effect on profits, what other (longer-term qualitative) factors should Arthur Juda's managers consider in deciding whether to accept the order? Prepare an incremental analysis to determine the special order's effect on operating income. (Enter a "0" for any zero balances. Use parentheses or a minus sign to indicate a decrease in operating income from the special order.) Incremental Analysis of Special Sales Order Decision Revenue from special order Less variable expense associated with the order: Variable manufacturing costs Contribution margin Per Unit Total Order (21,000 units) Less: Additional fixed expenses associated with the order Increase (decrease) in operating income from the special order In addition to determining the special order's effect on operating profits, Juda's managers also should consider the following: In addition to determining the special order's effect on operating profits, Juda's managers also should consider the following: A. Will Arthur Juda's other customers find out about the lower sale price Arthur Juda offered to Water Glasses? If so, wi B. Will lowering the sale price tarnish Arthur Juda's image as a high-quality brand? C. How will Arthur Juda's competitors react? Will they retaliate by cutting their prices and starting a price war? D. All of the above E. None of the above A Requirement 2. Arthur Juda's marketing manager, Jim Revo, argues against accepting the special order because the offer price of $80 is less than Arthur Juda's $89 cost to make the sunglasses. Revo asks you, as one of Arthur Juda's staff accountants, to explain whether his analysis is correct. When deciding whether to accept a special order, we should compare the extra revenues we will receive against the Costs that we will incur whether or not we fill the order are (2) to our decision. This is (1) why comparing the $80 price Water Glasses offered us with our $89 total cost of making and selling the sunglasses is (3) 1: Data Table Direct materials.. Direct labor.. Variable manufacturing overhead. Variable marketing expenses Fixed manufacturing overhead (1) $ Total cost * $2,100,000 total fixed manufacturing overhead + 105,000 pairs of sunglasses ............ $ extra costs we will incur to fill the order. extra fixed costs we will incur to fill the order. total costs of making the sunglasses. (2) 41 14 10 2: Requirements 1. How would accepting the order affect Arthur Juda's operating income? In addition to the special order's effect on profits, what other (longer-term qualitative) factors should Arthur Juda's managers consider in deciding whether to accept the order? irrelevant (3) relevant 4 20 2. Arthur Juda's marketing manager, Jim Revo, argues against accepting the special order because the offer price of $80 is less than Arthur Juda's $89 cost to make the sunglasses. Revo asks you, as one of Arthur Juda's staff accountants, to explain whether his analysis is correct. 89 correct misleading

Answer rating: 100% (QA)

Particulars Per Unit Total Revenue from Special Order 8021000 80 1680000 Less Variable E... View the full answer