Isabella in Madrid makes bull-repellent scent according to a traditional Spanish recipe, which normally sells at...
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Isabella in Madrid makes bull-repellent scent according to a traditional Spanish recipe, which normally sells at $9 per ounce. Normal production volume is 10,000 ounces per month. Average cost is $5 per ounce, of which $2 is direct material and $1 is variable conversion cost. This product is seasonal. From July to December, demand for this product drops to 6,000 ounces monthly. In November, Umberto offers to buy 1,600 ounces for $6,000. If Isabella accepts the order, she must supply the bull-repellent scent with a customised label for Umberto, at an additional cost of 25 cents per ounce. How much would Isabella expect to gain from the sale to Umberto? Isabella in Madrid makes bull-repellent scent according to a traditional Spanish recipe, which normally sells at $9 per ounce. Normal production volume is 10,000 ounces per month. Average cost is $5 per ounce, of which $2 is direct material and $1 is variable conversion cost. This product is seasonal. From July to December, demand for this product drops to 6,000 ounces monthly. In November, Umberto offers to buy 1,600 ounces for $6,000. If Isabella accepts the order, she must supply the bull-repellent scent with a customised label for Umberto, at an additional cost of 25 cents per ounce. How much would Isabella expect to gain from the sale to Umberto?
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Umbertos Order Umberto wants to buy 1600 ounces for 6000 Isabella needs to ... View the full answer
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Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
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