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Headwind Corp. makes lawn and garden equipment.




c Lawn Care put in a special order for;20,000 weed eaters for $15 each. Normally, Headwind sells the weed eaters for $20 each.;In addition, Lawn Care wants their own logo on the weed eaters. Cost information is as;follows;Direct Materials $8.99;Direct Labor 3.00;Variable overhead 2.00;Fixed overhead 3.50;To affix the Lawn Care logo, Headwind will have to lease a special machine for three;months (the time it will take to make the order) at a cost of 2,000 per month.;If Headwind accepts the special order, what will be the impact on operating income?;Hauserr Company makes 30,000 mowers each year. To date, all components have been;made in house. All fixed costs are unavoidable. Recently, Fester Fabrication offered to;supply Hauserr with the metal handles for the mowers for $5 each. Hauserr analyzed the;cost of the handles and came up with the following per unit information;Direct Materials $1.60;Direct Labor 0.50;Variable overhead 1.75;Fixed overhead 1.30;A. If Hauserr accepts Fester?s offer, operating income will be;$;Higher or Lower?;B. What is the highest price that Hauserr would pay an outside company for the;handles?


Paper#30566 | Written in 18-Jul-2015

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