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Accounting This is a relevant cost question. a)In this special Templar order, what are the relevant costs? b)Pretend there is ample idle capacity to make
Accounting This is a relevant cost question. a)In this special Templar order, what are the relevant costs? b)Pretend there is ample idle capacity to make the units needed by the Templar customer. Haytham’s discounted price offer is $50 per unit so by having this special order, how will Haythem's operating income change for the current month Haytham is in? c)Now if Haytham is operating at capacity when he pulls through with this special order, inform Haytham what his opportunity cost of each of his units delivered to the Templar customer is. d)If Haytham pulled through with the special order, and there is not enough idle capacity to make all the units, Haytham would need to cut back on the production of 2000 units for the normal customers. So calculate the minimum price per unit for this Templar special order to be acceptable. Given information: Haytham Kenway made a company and he makes one single product to target to Templars. Haytham sells his product at $80.00 per unit. The cost of making and selling his product to Templars uses 80,000 units of the company's normal activity level per month as you see below: Direct materials= $30; direct Labour =$6; variable manufacturing overhead =$3; variable selling and admin expense= $2; fixed manufacturing overhead= $20; fixed selling and admin expense =$7.00. A Templar he likes orders his single product and the customer orders 3000 units of Haythem's product that is to be sent to the customer via boat this month at a discounted price because this customer is really good friends with Haytham. The order of 3000 units has no effect on Haythem's normal sales and does not change Haythem's fixed costs so the variable selling and admin expense will be $2 less per unit on the special order than the normal sales Haytham would have. Answer
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