Question
1.Greenpark Skateboards uses a standard part in the manufacture of several of its skateboards. The cost of producing44,000parts is$140,000,which includes fixed costs of$69,000and variable costs
1.Greenpark Skateboards uses a standard part in the manufacture of several of its skateboards. The cost of producing44,000parts is$140,000,which includes fixed costs of$69,000and variable costs of$71,000.By outsourcing the part, the company can avoid 30% of the fixed costs.If the company buys the part, what is the most it can spend per unit so that operating income equals the operating income from making the part? (Round the final answer to the nearest cent.) a. 2.08 b.0.48 c.4.28 d.3.18
2.Trey's Trucks uses a standard part in the manufacture of several of its trucks. The cost of producing50,000parts is$140,000,which includes fixed costs of$90,000and variable costs of$50,000.The company can buy the part from an outside supplier for$3.00per unit and avoid 30% of the fixed costs.Assume that factory space freed up by purchasing the part from an outside source can be used to manufactureanother product that can be sold for$14,000profit. If the company makes the part, what will its operating income be?
$59,000
less than if the company bought the part
B.
$77,000
greater than if the company bought the part
C.
$199,000
greater than if the company bought the part
D.
$59,000
greater than if the company bought the part.
Comfort Sleep manufactures mattresses. The company has the capacity to produce 100,000 mattresses per year, but currently produces and sells 75,000 mattresses per year. The following information relates to current production:
Sales price per unit | $430 |
Variable costs per unit: | |
Manufacturing | $250 |
Marketing and administrative | $70 |
Total fixed costs: | |
Manufacturing | $790,000 |
Marketing and administrative | $210,000 |
If a special sales order is accepted for
2,800
mattresses at a price of
$360
per unit, fixed costs increase by
$6,600,
and variable marketing and administrative costs for that order are
$5
per unit, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.)
A.
Increase by $294,000
B.
Decrease by $287,400
C.
Increase by $301,400
D.Increase by 287400
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