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##### Korte Company is currently producing 15,200 units...

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Solution

**Question**

Korte Company is currently producing 15,200 units per month, which is 83% of its production capacity. Variable manufacturing costs are currently $8.10 per unit. Fixed manufacturing costs are $55,160 per month. Korte pays a 10% sales commission to its sales people, has $29,410 in fixed administrative expenses per month, and is averaging $321,160 in sales per month. A special order received from a foreign company would enable Korte Company to operate at 100% capacity. The foreign company offered to pay 79% of Korte's current selling price per unit. If the order is accepted, Korte will have to spend an extra $1.98 per unit to package the product for overseas shipping. Also, Korte Company would need to lease a new stamping machine to imprint the foreign company's logo on the product, at a monthly cost of $2,429. The special order would require a sales commission of $3,460. Compute the following: units for special order. (Round your answer to 0 decimal places, e.g. 2,510.) Foreign company's offered price per unit. (Round your answer to 2 decimal places, e.g. 5.25.) $ What is the manufacturing cost of producing one unit of Korte's product for regular customers? (Round your answer to 2 decimal places, e.g. 5.25.) $ Complete an incremental analysis of the special order. (If an amount is blank enter 0, all boxes must be filled to be correct. If the impact on net income is a decrease use either a negative sign preceding the amount, e.g. -45 or parenthesis, e.g. (45). Round your computations and final answers to 0 decimal places, e.g. 5,250. Enter all other amounts as positive and subtract where necessary.) Reject Order Accept Order Net Income Increase (Decrease) Revenues $ $ $ Costs Variable Manufacturing Sales commission Shipping Stamping machine Total costs Net income $ $ $ Should management accept the order? What is the lowest price that Korte could accept for the special order to earn net income of $1.35 per unit? (Round your answer to 2 decimal places, e.g. 5.25.) $,everything in the main table was wrong except the negative values, why are these always wrong?

Paper#9431 | Written in 18-Jul-2015

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