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Jumonville Company produces a single product. The cost of producing and selling




Question;Jumonville Company;produces a single product. The cost of producing and selling a single unit of;this product at the company's normal activity level of 70,000 units per month;is as follows;The normal selling price of the product is $56.70 per unit.;An order has been received from an overseas customer for 2,000 units to be;delivered this month at a special discounted price. This order would have no;effect on the company's normal sales and would not change the total amount of;the company's fixed costs. The variable selling and administrative expense;would be $0.70 less per unit on this order than on normal sales.;Direct labor is a variable cost in this company.Required:a. Suppose there is ample idle capacity to produce the units required by;the overseas customer and the special discounted price on the special order is;$51.20 per unit. By how much would this special order increase (decrease) the;company's net operating income for the month?b. Suppose the company is already operating at capacity when the special;order is received from the overseas customer. What would be the opportunity;cost of each unit delivered to the overseas customer?c. Suppose there is not enough idle capacity to produce all of the units;for the overseas customer and accepting the special order would require cutting;back on production of 700 units for regular customers. What would be the;minimum acceptable price per unit for the special order?Question 2Glunn Company makes three products in a single facility.;These products have the following unit product costs;Additional data concerning these products are listed below.;The mixing machines are potentially the constraint in the production facility.;A total of 24,200 minutes are available per month on these machines.;Direct labor is a variable cost in this company.Required:a. How many minutes of mixing machine time would be required to satisfy;demand for all three products?b. How much of each product should be produced to maximize net operating;income? (Round off to the nearest whole unit.)c. Up to how much should the company be willing to pay for one;additional hour of mixing machine time if the company has made the best use of;the existing mixing machine capacity? (Round off to the nearest whole;cent.)


Paper#42930 | Written in 18-Jul-2015

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