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accounting-Consider the following information, prepared based on a monthly capacity of 50,000 units:

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Question;Consider the following information, prepared based on a monthly capacity of 50,000 units:CategoryCost per UnitVariable manufacturing costs$12.00Fixed manufacturing costs$1.00Variable marketing costs$3.00Fixed marketing costs$2.00Capacity cannot be added in the short run and the firm currently sells the product for $20 per unit.Consider each of these scenarios independent of each other.a) The company is currently producing 50,000 units per month. A potential customer has contacted the firm and offered to purchase 10,000 units this month only. The customer is willing to pay $18 per unit. Since the potential customer approached the firm, there will be no variable marketing costs incurred. Should the company accept the special order? Why or why not? Be specific.My answer (what I think is right)Total capacity = 50,000 unitsCurrent Production = 50,000 unitsOffer = 10,000Profit per unit= $18 - $12 =$6.0010,000 units x $6.00 = $60,000Yes the company should accept the order because operating income will increase by $60,000 ($18-$12) x 10,000 units and the offer selling price per unit is higher than the variable manufacturing costs.This is an example of how the professor wants the questions to be answerCurrentWith OrderUnits sold30,00040,000Rev$300,000$355,000Var man$150,000$200,000Var mktg$30,000$30,000CM$120,000$125,000Fixed man$60,000$60,000Fixed mktg$20,000$20,000Operating income$40,000$45,000Yes, because OI will increase by $5,000 ($5.50 - $5.00) x 10,000 unitsb) The company is currently producing 40,000 units per month. A potential customer has contacted the firm and offered to purchase 10,000 units this month only. Since the potential customer approached the firm, there will be no variable marketing costs incurred. What is the minimum amount that the firm should be willing to accept for this order?This is an example of how the professor wants the questions to be answer(Lost revenue = $4.50 per unit, savings = $1 per unit)CurrentWith OrderUnits sold40,00040,000Rev$400,000$355,000Var man$200,000$200,000Var mktg$40,000$30,000CM$160,000$125,000Fixed man$60,000$60,000Fixed mktg$20,000$20,000Operating income$80,000$45,000Question #3 (44 points)Consider the following information:Q1Q2Q3Beginning inventory (units)0J1,100Budgeted units to be produced20,00020,00020,000Actual units produced19,00020,600QUnits soldA20,600RVariable manufacturing costs per unit produced$150$150$150Variable marketing costs per unit sold$20$20$20Budgeted fixed manufacturing costs$500,000$500,000$500,000Fixed marketing costs$200,000$200,000$200,000Selling price per unit$300$300$300Variable costing operating incomeB$1,978,000SAbsorption costing operating incomeCK$1,859,000Variable costing beginning inventory ($)D$165,000TAbsorption costing beginning inventory ($)ELUVariable costing ending inventory ($)FM$75,000Absorption costing ending inventory ($)GN$87,500PVVHOVAllocated fixed manufacturing costsIP$480,000There are no price, efficiency, or spending variances, and any production-volume variance is directly written off to cost of goods in the quarter in which it occurs.Complete the missing figures from the above Table. You need to show your work in order to be eligible for partial credit.Q1Q2Q3AJQBKRCLSDMTENUFOVGPHI

 

Paper#44048 | Written in 18-Jul-2015

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