Question
1) - XYZ Company sells a product at $10 a pair. Variable manufacturing costs are $4.50 a pair and allocated fixed costs are $1.50. The
1) - XYZ Company sells a product at $10 a pair. Variable manufacturing costs are $4.50 a pair and allocated fixed costs are $1.50. The company has enough idle capacity to accept a one time special order of 20,000 units at $5 a unit. The company does not incur any marketing costs as a result of the special order. Advise the company on whether to accept the special order. Support your answer.
B) 5%- A company manufactures tables. The cost to manufacture to manufacture an unfinished table consists of $31 dollars of variable cost and $4 of fixed overhead applied for a total cost of $35. Each table is sold for $50. Management has excess capacity and can finish the tables for an additional variable cost of $9, with no increade in fixed overhead costs. The finished table can be sold for $60.
What would you advise the company and why?
2)- A company has provided you with the following data
Sales price per unit -$20
Variable cost per unit - $8
Fixed costs - $60,000
A) - How many units should be sold to a earn a profit that is 10% of sales
B) - If the tax rate is 30%, how many units must be sold to earn an after tax of $80,000
C) - What is the margin of safety at a level of sales of 10,000 units
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