The management team of Swifty Industries was evaluating its performance for the first half of the...

   

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The management team of Swifty Industries was evaluating its performance for the first half of the year. Production and sales of its fans were on budget at 2,850 units to date, with the following income statement reflecting its income for the first half of the year. Sales Variable costs: DM DL Variable-MOH Variable selling Contribution margin Fixed costs: Fixed-MOH Fixed selling Operating income (loss) $42,750 28,500 8,550 5,700 34,000 102,000 $245,100 85,500 159,600 136,000 $23,600 Orders for the second half of the year were coming in slower than what the company had been expecting. When a new customer called and requested a special discount, the sales team listened. (a) Assume the customer requests 190 units in the special order and offers $51 per unit. Since the customer came directly to the company, no variable selling cost will be incurred. How much better or worse off will Swifty Industries be if it accepts this special order, assuming it has enough idle capacity for the order? Swifty Industries would be ✓ by $ by accepting this order. (b) Assume instead that the customer requests 95 units in the special order and offers $42 per unit. Swifty management still believes there will be enough capacity to take on the special order. This time, however, variable selling costs will be incurred because the customer is working through a sales representative. How much better or worse off will Swifty Industries be if it accepts this special order? Swifty Industries would be eTextbook and Media Save for Later ✓ by $ by accepting this order. Attempts: 0 of 2 used Submit Answer (c) Assume instead the customer requests 165 units and both a discounted price of $42 per unit and a customized version of the fan. In order to make the customized version, Swifty will need to purchase a special piece of equipment for $2,915, but it will not incur any variable selling costs for this order. How much better or worse off will the company be if it uses its available capacity and accepts this special order? Swifty Industries would be by $ by accepting this order. The management team of Swifty Industries was evaluating its performance for the first half of the year. Production and sales of its fans were on budget at 2,850 units to date, with the following income statement reflecting its income for the first half of the year. Sales Variable costs: DM DL Variable-MOH Variable selling Contribution margin Fixed costs: Fixed-MOH Fixed selling Operating income (loss) $42,750 28,500 8,550 5,700 34,000 102,000 $245,100 85,500 159,600 136,000 $23,600 Orders for the second half of the year were coming in slower than what the company had been expecting. When a new customer called and requested a special discount, the sales team listened. (a) Assume the customer requests 190 units in the special order and offers $51 per unit. Since the customer came directly to the company, no variable selling cost will be incurred. How much better or worse off will Swifty Industries be if it accepts this special order, assuming it has enough idle capacity for the order? Swifty Industries would be ✓ by $ by accepting this order. (b) Assume instead that the customer requests 95 units in the special order and offers $42 per unit. Swifty management still believes there will be enough capacity to take on the special order. This time, however, variable selling costs will be incurred because the customer is working through a sales representative. How much better or worse off will Swifty Industries be if it accepts this special order? Swifty Industries would be eTextbook and Media Save for Later ✓ by $ by accepting this order. Attempts: 0 of 2 used Submit Answer (c) Assume instead the customer requests 165 units and both a discounted price of $42 per unit and a customized version of the fan. In order to make the customized version, Swifty will need to purchase a special piece of equipment for $2,915, but it will not incur any variable selling costs for this order. How much better or worse off will the company be if it uses its available capacity and accepts this special order? Swifty Industries would be by $ by accepting this order.

Answer rating: 100% (QA)

SWIFTY INDUSTRIES Income Statement for first Six Months At 2850 Units Per unit Sales 245100 86 Varia... View the full answer