Karakomi Cameras Inc. has a Disposables Division that produces a camera that sells for $15.00 per unit
Question:
Karakomi Cameras Inc. has a Disposables Division that produces a camera that sells for $15.00 per unit in the open market. The cost of the product is $13.10 (variable manufacturing of $5.00, plus fixed manufacturing of $8.10). Total fixed manufacturing costs are $567,000 at the normal annual production volume of 70,000 units. The Overseas Division has offered to buy 20,000 units at the full cost of $13.10. The Disposables Division has excess capacity, and the 20,000 units can be produced without interfering with the current outside sales of 70,000 units. The total fixed cost of the Disposables Division will not change.
Explain whether the Disposables Division should accept or reject the offer. Show calculations.
Compute net income at normal annual production volume.
Do not use a negative sign with your answers.
Do not round "Per Unit" answers.
Karakomi Cameras, Inc. | ||
---|---|---|
Disposables Division Unit Margins | ||
Current Sales | ||
Per Unit | Total | |
Sales | $Answer | $Answer |
Variables costs | Answer | Answer |
Contribution margin | Answer | Answer |
Fixed costs: | Answer | Answer |
Net income | $Answer | $Answer |
Compute net income including the offer to purchase additional cameras.
Do not use a negative sign with your answers.
New Sales | |||||
---|---|---|---|---|---|
Proposed Sales | Per Unit | Total | Grand Total | ||
Sales | $Answer | $Answer | $Answer | ||
Variable costs | Answer | Answer | Answer | ||
Contribution margin | Answer | $Answer | Answer | ||
Fixed costs: | Answer | Answer | |||
Net income | $Answer | $Answer |
Cost Accounting A Managerial Emphasis
ISBN: 978-0133392883
6th Canadian edition
Authors: Horngren, Srikant Datar, George Foster, Madhav Rajan, Christ