Ratzlaff Company has a current production capacity of 20,000 units per month. Unit costs at this...
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Ratzlaff Company has a current production capacity of 20,000 units per month. Unit costs at this level are: Direct materials $0.25 Direct labor 0.40 Variable overhead 0.15 Fixed overhead Marketing - fixed 0.30 Marketing/distribution - variable 0.40 0.20 Current monthly sales are 18,000 units at $2.20. Jim Company has contacted Ratzlaff Company about purchasing 1,500 units at $1.60 each. Current sales would not be affected by the one-time-only special order, and variable marketing/distribution costs would not be incurred on the special order. Required: Should Ratzlaff accept the order? Prepare your answer in good form: a. What is Ratzlaff Company's current total monthly income before the special order? b. What is Ratzlaff Company's change in operating profits if the special order is accepted? Ratzlaff Company has a current production capacity of 20,000 units per month. Unit costs at this level are: Direct materials $0.25 Direct labor 0.40 Variable overhead 0.15 Fixed overhead Marketing - fixed 0.30 Marketing/distribution - variable 0.40 0.20 Current monthly sales are 18,000 units at $2.20. Jim Company has contacted Ratzlaff Company about purchasing 1,500 units at $1.60 each. Current sales would not be affected by the one-time-only special order, and variable marketing/distribution costs would not be incurred on the special order. Required: Should Ratzlaff accept the order? Prepare your answer in good form: a. What is Ratzlaff Company's current total monthly income before the special order? b. What is Ratzlaff Company's change in operating profits if the special order is accepted?
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To determine whether Ratzlaff Company should accept the special order we need to compare the current total monthly income before the special order to ... View the full answer
Related Book For
Managerial Accounting
ISBN: 978-1259307416
16th edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
Posted Date:
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