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Headwind Corp. makes lawn and garden equipment.

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Question;c Lawn Care put in a special order for20,000 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 asfollows:Direct Materials $8.99Direct Labor 3.00Variable overhead 2.00Fixed overhead 3.50To affix the Lawn Care logo, Headwind will have to lease a special machine for threemonths (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 beenmade in house. All fixed costs are unavoidable. Recently, Fester Fabrication offered tosupply Hauserr with the metal handles for the mowers for $5 each. Hauserr analyzed thecost of the handles and came up with the following per unit information:Direct Materials $1.60Direct Labor 0.50Variable overhead 1.75Fixed overhead 1.30A. If Hauserr accepts Fester?s offer, operating income will be$_____________________Higher or Lower?B. What is the highest price that Hauserr would pay an outside company for the handles?

 

Paper#54695 | Written in 18-Jul-2015

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