Question
1. Product A is normally sold for $40 per unit. A special price of $34 is offered for the export market. The variable production cost
1.
Product A is normally sold for $40 per unit. A special price of $34 is offered for the export market. The variable production cost is $24 per unit. An additional export tariff of 15% of revenue must be paid for all export products. Assume there is sufficient capacity for the special order.
Question Content Area
a. Prepare a differential analysis dated March 16 on whether to reject (Alternative 1) or accept (Alternative 2) the special order. If required, round your answers to two decimal places. If an amount is zero, enter "0".
Reject Order (Alternative 1) | Accept Order (Alternative 2) | Differential Effects (Alternative 2) | |
Revenues, per unit | $fill in the blank cf39c2fe8ff9036_1 | $fill in the blank cf39c2fe8ff9036_2 | $fill in the blank cf39c2fe8ff9036_3 |
Costs: | |||
Variable manufacturing costs, per unit | fill in the blank cf39c2fe8ff9036_4 | fill in the blank cf39c2fe8ff9036_5 | fill in the blank cf39c2fe8ff9036_6 |
Export tariff, per unit | fill in the blank cf39c2fe8ff9036_7 | fill in the blank cf39c2fe8ff9036_8 | fill in the blank cf39c2fe8ff9036_9 |
Profit (loss), per unit | $fill in the blank cf39c2fe8ff9036_10 | $fill in the blank cf39c2fe8ff9036_11 | $fill in the blank cf39c2fe8ff9036_12 |
Question Content Area
b. Should the special order be rejected (Alternative 1) or accepted (Alternative 2)?
Accept the special orderReject the special order
A condensed income statement by product line for Warrick Beverage Inc. indicated the following for Mango Cola for the past year:
Sales | $236,400 |
Cost of goods sold | (110,000) |
Gross profit | $126,400 |
Operating expenses | (146,000) |
Operating loss | $(19,600) |
It is estimated that 13% of the cost of goods sold represents fixed factory overhead costs and that 19% of the operating expenses are fixed. Because Mango Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued.
Question Content Area
a. Prepare a differential analysis dated February 29 to determine whether Mango Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter "0". If required, use a minus sign to indicate a loss.
Continue Mango Cola (Alternative 1) | Discontinue Mango Cola (Alternative 2) | Differential Effects (Alternative 2) | |
Revenues | $fill in the blank 24eefafd5005078_1 | $fill in the blank 24eefafd5005078_2 | $fill in the blank 24eefafd5005078_3 |
Costs: | |||
Variable cost of goods sold | fill in the blank 24eefafd5005078_4 | fill in the blank 24eefafd5005078_5 | fill in the blank 24eefafd5005078_6 |
Variable operating expenses | fill in the blank 24eefafd5005078_7 | fill in the blank 24eefafd5005078_8 | fill in the blank 24eefafd5005078_9 |
Fixed costs | fill in the blank 24eefafd5005078_10 | fill in the blank 24eefafd5005078_11 | fill in the blank 24eefafd5005078_12 |
Profit (Loss) | $fill in the blank 24eefafd5005078_13 | $fill in the blank 24eefafd5005078_14 | $fill in the blank 24eefafd5005078_15 |
Question Content Area
b. Should Mango Cola be retained?
YesNo
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started