Rowe Tool and Die (RTD) produces metal fittings as a supplier to various manufacturing firms in...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Rowe Tool and Die (RTD) produces metal fittings as a supplier to various manufacturing firms in the area. The following is the forecasted income statement for the next quarter, which is the typical planning horizon used at RTD. RTD expects to sell 61,000 units during the quarter. RTD carries no inventories. Sales revenue Costs of fitting produced Gross profit Administrative costs Operating profit $ 30.80 23.20 $ 7.60 5.40 Amount $ 1,878,800 1,415,200 $ 463,600 329,400 Per Unit $ 134,200 $ 2.20 Fixed costs included in this income statement are $396,500 for depreciation on plant and machinery and miscellaneous factory operations and $102,500 for administrative costs. RTD has received a request for 10,000 fittings to be produced in the next quarter from Endicott Manufacturing. Endicott has never purchased from RTD, although they have been a local company for many years. Endicott has offered to pay $21.60 per unit. RTD can easily produce the 10,000 units with its existing capacity. Production of the 10,000 units will incur all variable manufacturing costs but no fixed manufacturing costs. No administrative costs will be incurred because of the order. Required: a. What impact would accepting this special order have on operating profit? b. Should RTD accept the order? Complete this question by entering your answers in the tabs below. Required A Required B What impact would accepting this special order have on operating profit? (Enter your answers in thousands rounded to 1 decimal place. (i.e., 5,400,400 should be entered as 5,400.4). Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) Sales revenue Variable costs: Production Administrative Contribution margin Fixed costs Operating profit Costs and Revenues (Thousands of Dollars) Status Quo 61,000 Units Alternative 71,000 Difference Units Required A Required B > Rowe Tool and Die (RTD) produces metal fittings as a supplier to various manufacturing firms in the area. The following is the forecasted income statement for the next quarter, which is the typical planning horizon used at RTD. RTD expects to sell 61,000 units during the quarter. RTD carries no inventories. Sales revenue Costs of fitting produced Gross profit Administrative costs Operating profit $ 30.80 23.20 $ 7.60 5.40 Amount $ 1,878,800 1,415,200 $ 463,600 329,400 Per Unit $ 134,200 $ 2.20 Fixed costs included in this income statement are $396,500 for depreciation on plant and machinery and miscellaneous factory operations and $102,500 for administrative costs. RTD has received a request for 10,000 fittings to be produced in the next quarter from Endicott Manufacturing. Endicott has never purchased from RTD, although they have been a local company for many years. Endicott has offered to pay $21.60 per unit. RTD can easily produce the 10,000 units with its existing capacity. Production of the 10,000 units will incur all variable manufacturing costs but no fixed manufacturing costs. No administrative costs will be incurred because of the order. Required: a. What impact would accepting this special order have on operating profit? b. Should RTD accept the order? Complete this question by entering your answers in the tabs below. Required A Required B What impact would accepting this special order have on operating profit? (Enter your answers in thousands rounded to 1 decimal place. (i.e., 5,400,400 should be entered as 5,400.4). Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) Sales revenue Variable costs: Production Administrative Contribution margin Fixed costs Operating profit Costs and Revenues (Thousands of Dollars) Status Quo 61,000 Units Alternative 71,000 Difference Units Required A Required B >
Expert Answer:
Related Book For
Posted Date:
Students also viewed these accounting questions
-
Assume that the Central bank decides to sell government bonds to the commercial banks. a.) Use the demand and supply curves for loanable funds to show the effect of this measure on the interest rate....
-
The following sequences are linearly convergent. Generate the first five terms of the sequence {n} using Aitken's (2 method. a. p0 = 0.5, pn = (2 epn1 + p2n1)/3, n 1 b. p0 = 0.75, pn = (epn1/3)1/2,...
-
Dulux Paints Canada (DPC) is a chain of paint stores in various locations throughout Canada. Fred Antfleck is the sole shareholder of the privately-held company and is looking to expand by either...
-
In a game of cards you are dealt a hand of six cards at random from a standard deck of 52 cards. You are declared winner if you are being dealt an ace, two kings and three queens. Find the...
-
Avanti manufactures embroidered jackets. The company prepares flexible budgets and uses a standard cost system to control manufacturing costs. The following standard unit cost of a jacket is based on...
-
Gable Company uses three activity pools. Each pool has a cost driver. Information for Gable Company follows: Activity Pools Total Cost of Pool Cost Driver Estimated Cost Driver Machining $ 171,100...
-
Write a paper on correlation between sales and gross income by Starbucks and also describe Hypothesis Statement and Data Collection &Analysis.
-
How do cultural norms and values shape patterns of social behavior and interpersonal relations, influencing everything from familial structures to modes of governance and economic exchange?
-
How might anthropological theories of cultural relativism and reflexivity inform our understanding of cultural dynamics, fostering critical engagement with our own cultural assumptions and fostering...
-
Explain how the compensation policy is decided in a company. Talk about the various factors involved. (100 words) 2. Explain the hiring process in your current organization/any particular Canadian...
-
If the audit report is sent after a significant amount of time has passed since the end of the audit, how does it affect the audit program?
-
The White House emphasizes federal-state-local cooperation in enforcing U.S. immigration laws and takes a step to enhance the homeland security mission space by integrating certain public safety...
-
Write a paper about Plastic Bags: discuss three things you learned about plastic bags? If you were given the opportunity to address the public-at-large, what would be your recommendation regarding...
-
Les has collected stamps in his spare time for years. He purchased many of his stamps at a price much lower than the current market value. Les recently lost his job as a carpenter. Since his wife...
-
(a) Express the magnitude of the electric field inside the strip in Figure 27.43 in terms of the width \(w\) of the strip and the potential difference \(V_{\mathrm{RL}}\). (b) Given the magnitude...
-
A compass sits on a table with its needle pointing to Earth's North Pole. A bar magnet with its long axis oriented along an east-west line is brought toward the compass from the east. If the needle...
-
Explain why the \(1 / r\) dependence expressed in Eq. 27.38 is consistent with the symmetry of the wire causing the magnetic field. B = = 2kI rco 2k I (27.38) &
Study smarter with the SolutionInn App