Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Alpine Luggage has a capacity to produce 400,000 suitcases per year. The company is currently producing and selling 320,0 per year at a selling price
Alpine Luggage has a capacity to produce 400,000 suitcases per year. The company is currently producing and selling 320,0 per year at a selling price of $399 per case. The cost of producing and selling one case follows: 155 Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs Total costs $ 291 The company has received a special order for 20,000 suitcases at a price of $252 per case. It will not have to pay any sales commission on the special order, so the variable selling and administrative costs would be only $48 per suitcase. The special o would have no effect on total fixed costs. The company has rejected the offer based on the following computations: $ 252 155 Selling price per case Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs Net profit (loss) per case 48 $ (11) Required: a. What is the impact on profit for the year if Alpine accepts the special order? (Enter your answers in thousands of dollars. Sele option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) (All revenues and costs in 9000) Status Quo Alternative 320,000 Units 340,000 Units Difference ve COSLS ng and administrative costs molt (loss) per case 2e les $ (11) Required: a. What is the impact on profit for the year if Alpine accepts the special order? (Enter your answers in thousand option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) DOK int (All revenues and costs in $000) Status Quo Alternative 320,000 Units 340,000 Units Difference ences Sales revenue Variable costs: Manufacturing Selling and administrative Contribution margin Fixed costs Operating profit b. Do you agree with the decision to reject the special order? Yes No
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