6 01:48:51 eBook Landor Appliance Corporation makes and sells electric fans. Each fan regularly sells for $42. The following cost data per fan is based on a full capacity of 150,000 fans produced each period. Direct materials $ 8 $9 Manufacturing overhead (78% variable and 30% unavoidable fixed) $ 10 Direct labor A special order has been received by Landor for a sale of 25,000 fans to an overseas customer. The only selling costs that would be incurred on this order would be $4 per fan for shipping. Landor is now selling 120,000 fans through regular channels each period. Assume that direct labor is an avoidable cost in this decision. What should Landor use as a minimum selling price per fan in negotiating a price for this special order? Multiple Choice $28 per fan

6 01:48:51 eBook Landor Appliance Corporation makes and sells electric fans. Each fan regularly sells for $42. The following cost data per fan is based on a full capacity of 150,000 fans produced each period. Direct materials $ 8 $9 Manufacturing overhead (78% variable and 30% unavoidable fixed) $ 10 Direct labor A special order has been received by Landor for a sale of 25,000 fans to an overseas customer. The only selling costs that would be incurred on this order would be $4 per fan for shipping. Landor is now selling 120,000 fans through regular channels each period. Assume that direct labor is an avoidable cost in this decision. What should Landor use as a minimum selling price per fan in negotiating a price for this special order? Multiple Choice $28 per fan

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Landor Appliance Corporation makes and sells electric fans. Each fan regularly sells for $36. The following cost data per fan is based on a full capacity of 138,000 fans produced each period. Direct materials $9 Direct labor $8 $8 Manufacturing overhead (25% variable and 75% unavoidable fixed) A special order has been received by Landor for a sale of 15.000 fans to an overseas customer. The only selling costs that would be incurred on this order would be $3 per fan for shipping. Landor is now selling 123,000 fans through regular channels each period. Assume that direct labor is an avoidable cost in this decision. What should Landor use as a minimum selling price per fan in negotiating a price for this special order? Multiple Choice $22 per fan $25 per fan $23 per fan $19 per fan
Landor Appliance Corporation makes and sells electric fans. Each fan regularly sells for $42. The following cost data per fan is based on a full capacity of 150,000 fans produced each period. Direct materials Direct labor Manufacturing overhead (70% variable and 30% unavoidable fixed) $8 $9 $10 A special order has been received by Landor for a sale of 25,000 fans to an overseas customer. The only selling costs that would be incurred on this order would be $4 per fan for shipping. Landor is now selling 120,000 fans through regular channels each period. Assume that direct labor is an avoidable cost in this decision. What should Landor use as a minimum selling price per fan in negotiating a price for this special order?
2 Cierra, Inc. manufactures computer chips. Currently, the costs per unit are as follows: Direct materials $1.00 Direct labor 10.00 Variable manufacturing overhead 5.00 Fixed manufacturing overhead 8.00 Total $24.00 Chips Corp., has contacted Cierra with an offer to sell to Cierra 10,000 of the chips for $22.00 per chip. If Cierra accepts the proposal, $50,000 of the fixed overhead will be eliminated. Should Cierra make or buy the chips? Justify your answer with calculations.
Andreasen Corporation manufactures thermostats for office buildings. The following is the cost of each unit. Materials Labor Variable overhead Fixed overhead ($1,980,000 per year; 110,000 units per year) Total $36.00 14.00 4.00 18.00 $72.00 Simpson Company has approached Andreasen with an offer to buy 9,400 thermostats at a price of $60 each. The regular price is $100. Andreasen has the capacity to produce the 9,400 additional units without affecting its current production of 110,000 units. Simpson requires that each unit use its branding, which requires a more expensive label, resulting in an additional $2.00 per unit material cost. The labor cost of affixing the label will be the same as for the current models. The Simpson order will also require a one- time rental of packaging equipment for $34,600. Required: a. Prepare a schedule to show the impact of filling the Simpson order on Andreasen's profits for the year. b. Do you agree with the decision to accept the special order? c.…
Waterway Industries incurs the following costs to produce 10600 units of a subcomponent: Direct materials $8904Direct labor 11978Variable overhead 13356Fixed overhead 16200 An outside supplier has offered to sell Waterway the subcomponent for $2.85 a unit. If Waterway accepts the offer, by how much will net income increase (decrease)? a. $(3074)b. $(9328)c. $4028d. $20228
Your Company makes and sells electric fans. Each fan regularly sells for $42. Your Company is now selling 120,000 fans through regular channels each period. The following cost data per fan is based on a full capacity of 150,000 fans produced each period. Direct materials... $8 Direct labor $9 Manufacturing overhead(60% variable and 40% unavoidable fixed) $10 A special order has been received for a sale of 25,000 fans to an overseas customer at $30 per fan. The only selling costs that would be incurred on this order would be $4 per fan for shipping. What is increase in income if the special order is accepted? gorup of answers $75,000 $50,000 $125,000 $175,000 $225,000
Marcotti Cupcakes bakes and sells a basic cupcake for $1.25. The cost of producing 600,000 cupcakes in the prior year was: Revenues $750,000 330,000 Direct materials Direct labor 60,000 Manufacturing overhead (fixed) 133,000 Manufacturing overhead (variable) 78,000 At the start of the current year, Marcotti received a special order for 16,000 cupcakes to be sold for $1.09 per cupcake. To complete the order, the company must incur an additional $800 in total fixed costs to lease a special machine that will stamp the cupcakes with the customer's logo. This order will not affect any f Marcotti's other operations and it has excess capacity to fulfill the contract. Should the company accept the special order? profit will
Andreasen Corporation manufactures thermostats for office buildings. The following is the cost of each unit. Materials $ 36.00 Labor 14.00 Variable overhead 4.00 Fixed overhead ($1,926,000 per year; 107,000 units per year) 18.00 Total $ 72.00 Simpson Company has approached Andreasen with an offer to buy 9,100 thermostats at a price of $60 each. The regular price is $100. Andreasen has the capacity to produce the 9,100 additional units without affecting its current production of 107,000 units. Simpson requires that each unit use its branding, which requires a more expensive label, resulting in an additional $2.00 per unit material cost. The labor cost of affixing the label will be the same as for the current models. The Simpson order will also require a one-time rental of packaging equipment for $34,000. Required: a. Prepare a schedule to show the impact of filling the Simpson order on Andreasen's profits for the year. b. Do you agree with the decision to accept the special order? c.…
Rubium Micro Devices currently manufactures a subassembly for its main product. The costs per unit are as follows: Direct materials $51.00 Direct labor 43.00 Variable overhead 38.00 Fixed overhead 33.00 Total $165.00 Crayola Technologies Inc. has contacted Rubium with an offer to sell 10,000 of the subassemblies for $138.00 each. Rubium will eliminate $89, 000 of fixed overhead if it accepts the proposal. What are the relevant costs for Rubium? Question 8 options: $929, 000 $1,029, 000 $1,409, 000 $1, 739,000
TikTok Electronics manufactures an aluminium fibre tripod model “TRI-X” which sells for$1,600. The production cost computed per unit under traditional costing for each model in2019 was as follows:Traditional Costing TRIXDirect Materials $700Direct Labour ($20/hour) $120Manufacturing overhead ($38 per DLH) $228Total per unit cost $1, 048In 2019, TikTok Electronics manufactured 26,000 units of TRI-X. Under traditional costing, the gross profit on TRI-X was $552 ($1,600-$1,048). Management is considering phasing out TRIX as it has continuously failed to reach the gross profit target of $600. Before finalizing its decision, management asks TikTok Electronics management accountant to prepare an analysis using activity-based costing (ABC). The management accountant accumulates the following information about overhead for the year ended December 31, 2019.Required:1. Calculate the activity rates for each of the overhead items using the four cost drivers. 2. Using the rates in (1) determine…
TikTok Electronics manufactures an aluminium fibre tripod model “TRI-X” which sells for$1,600. The production cost computed per unit under traditional costing for each model in2019 was as follows:Traditional Costing TRIXDirect Materials $700Direct Labour ($20/hour) $120Manufacturing overhead ($38 per DLH) $228Total per unit cost $1, 048In 2019, TikTok Electronics manufactured 26,000 units of TRI-X. Under traditional costing, thegross profit on TRI-X was $552 ($1,600-$1,048). Management is considering phasing out TRIX as it has continuously failed to reach the gross profit target of $600. Before finalizing itsdecision, management asks TikTok Electronics management accountant to prepare an 3analysis using activity-based costing (ABC). The management accountant accumulates thefollowing information about overhead for the year ended December 31, 2019.Activity CostPoolsCost Drivers EstimatedOverheadExpected Use ofCost DriversPurchasing Number oforders$1,200,000 40,000Machine setups Number…
TikTok Electronics manufactures an aluminium fibre tripod model “TRI-X” which sells for$1,600. The production cost computed per unit under traditional costing for each model in2019 was as follows:Traditional Costing TRIXDirect Materials $700Direct Labour ($20/hour) $120Manufacturing overhead ($38 per DLH) $228Total per unit cost $1, 048In 2019, TikTok Electronics manufactured 26,000 units of TRI-X. Under traditional costing, thegross profit on TRI-X was $552 ($1,600-$1,048). Management is considering phasing out TRIX as it has continuously failed to reach the gross profit target of $600. Before finalizing itsdecision, management asks TikTok Electronics management accountant to prepare an3analysis using activity-based costing (ABC). The management accountant accumulates thefollowing information about overhead for the year ended December 31, 2019.Activity CostPoolsCost Drivers EstimatedOverheadExpected Use ofCost DriversPurchasing Number oforders$1,200,000 40,000Machine setups Number…