The standard cost sheet for the leading product made by Ace Corporation shows the following data: Direct
Question:
Direct materials ........................................................... $ 70
Direct labor (2 hours at $25/hour) ...................................... 50
Manufacturing overhead:
Variable costs (2 hours at $25/hour) ................................... 50
Fixed costs (2 hours at $22/hour) ...................................... 44
Total standard cost .................................................... $214
The product normally sells for $309. The company is presently operating slightly over 70 percent of capacity.
1. A chain of discount stores has offered to purchase 4,000 units of the product for $229 per unit. Shipping costs would be $2 per unit. Special packaging would be needed and would cost an additional $1 per unit. There would be no other variable selling or administrative expenses.
Should the order be accepted? (Show all calculations.)
2. Ignoring all factors except those given, what is the least amount that Ace Corporation could profitably accept for a special order of 4,000 units?
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Related Book For
College Accounting Chapters 1-30
ISBN: 978-0077862398
14th edition
Authors: John Price, M. David Haddock, Michael Farina
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