Hartford, Inc. manufactures a single product. Shown are projected revenues and costs based on last year's...

 

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Hartford, Inc. manufactures a single product. Shown are projected revenues and costs based on last year's income statement (8,000 units) and practical capacity (10,000 units). The costs are either variable, fixed, or mixed (part variable and part fixed.) You need to figure out what the cost type is based on the cost behavior. Practical Capacity Last Year (8,000 units) (10,000 units) Total Per Unit Total Per Unit Revenue $800,000 $100.00 $1,000,000 $100.00 Costs: Direct Material $200,000 $25.00 $250,000 $25.00 Direct Labor $160,000 $20.00 $200,000 $20.00 Mfg. Overhead $180,000 $22.50 $200,000 $20.00 Selling Expenses $40,000 $5.00 $50,000 $5.00 Admin. Expenses $50,000 $6.25 $50,000 $5.00 Total Costs $630,000 $78.75 $750,000 $75.00 Pre-Tax Profit $170,000 $250,000 Required 1. Assume that Hartford expects to sell the same number of units as last year in their normal distribution channels (8,000 units). They have received an offer from a one-time customer (not part of their normal customer mix) to buy 1,000 units (additional to their expected normal sales) at a price of $71. By how many dollars would pre-tax profit increase or decrease if Hartford accepts the special order? Hartford, Inc. manufactures a single product. Shown are projected revenues and costs based on last year's income statement (8,000 units) and practical capacity (10,000 units). The costs are either variable, fixed, or mixed (part variable and part fixed.) You need to figure out what the cost type is based on the cost behavior. Practical Capacity Last Year (8,000 units) (10,000 units) Total Per Unit Total Per Unit Revenue $800,000 $100.00 $1,000,000 $100.00 Costs: Direct Material $200,000 $25.00 $250,000 $25.00 Direct Labor $160,000 $20.00 $200,000 $20.00 Mfg. Overhead $180,000 $22.50 $200,000 $20.00 Selling Expenses $40,000 $5.00 $50,000 $5.00 Admin. Expenses $50,000 $6.25 $50,000 $5.00 Total Costs $630,000 $78.75 $750,000 $75.00 Pre-Tax Profit $170,000 $250,000 Required 1. Assume that Hartford expects to sell the same number of units as last year in their normal distribution channels (8,000 units). They have received an offer from a one-time customer (not part of their normal customer mix) to buy 1,000 units (additional to their expected normal sales) at a price of $71. By how many dollars would pre-tax profit increase or decrease if Hartford accepts the special order?

Answer rating: 100% (QA)

To determine the impact on pretax profit if Hartford accepts the special order for 1000 units at a p... View the full answer