Alton Inc. is working at full production capacity producing 30,000 units of a unique product. Manufacturing...
Fantastic news! We've Found the answer you've been seeking!
Question:
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/6658dc82585e9_6496658dc81df60c.jpg)
Transcribed Image Text:
Alton Inc. is working at full production capacity producing 30,000 units of a unique product. Manufacturing costs per unit for the product are as follows: Direct materials Direct labor Manufacturing overhead $ 7 6 8 Total manufacturing cost per unit $21 The per-unit manufacturing overhead cost is based on a $6 variable cost per unit and $60,000 fixed costs. The nonmanufacturing costs, all variable, are $6 per unit, and the sales price is $40 per unit. Sports Headquarters Company (SHC) has asked Alton to produce 6,000 units of a modification of the new product. This modification would require the same manufacturing processes. However, because of the nature of the proposed sale, the estimated nonmanufacturing costs per unit are only $3 (not $6). Alton would sell the modified product to SHC for $30 per unit. Required 1-a. Calculate the contribution margin for 6,000 units for both the current and special order. 1-b. Should Alton produce the special order for SHC? 2. Suppose that Alton Inc. had been working at less than full capacity to produce 25,000 units of the product when SHC made the offer. What is the minimum price per unit that Alton should accept for the modified product under these conditions? Alton Inc. is working at full production capacity producing 30,000 units of a unique product. Manufacturing costs per unit for the product are as follows: Direct materials Direct labor Manufacturing overhead $ 7 6 8 Total manufacturing cost per unit $21 The per-unit manufacturing overhead cost is based on a $6 variable cost per unit and $60,000 fixed costs. The nonmanufacturing costs, all variable, are $6 per unit, and the sales price is $40 per unit. Sports Headquarters Company (SHC) has asked Alton to produce 6,000 units of a modification of the new product. This modification would require the same manufacturing processes. However, because of the nature of the proposed sale, the estimated nonmanufacturing costs per unit are only $3 (not $6). Alton would sell the modified product to SHC for $30 per unit. Required 1-a. Calculate the contribution margin for 6,000 units for both the current and special order. 1-b. Should Alton produce the special order for SHC? 2. Suppose that Alton Inc. had been working at less than full capacity to produce 25,000 units of the product when SHC made the offer. What is the minimum price per unit that Alton should accept for the modified product under these conditions?
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
How might one glacial till differ from another?
-
Solar Petroleum owns 100% of the working interest in the Bearcat Field in West Texas. The field has been producing and is expected to produce for 10 more years. Events have occurred that indicate...
-
Woodland Industries manufactures and sells custom-made windows. Its job costing system was designed using an activity-based costing approach. Direct materials and direct labor costs are accumulated...
-
Question Classroom Demonstration Exercises, Borcik, Exercises Set A (Excel template for all questions are available in MyLab Accounting, Working papers for elect -1A. From the sales journal below,...
-
Find an element of set A that is not an element of set B . A = { y: y is a number between 5 and 1 4 } B = { y: y is an integer between 5 and 1 4 }
-
Q2. Show that sin-13/5-sin-18/17 = cas-184/85. Q3. Find equation of tangent and normal to curve x2/3 + y/3 = 2.
-
Lopez acquired and placed in service a building on June 1, 2018, for $48,434,300. Compute the depreciation deduction assuming the building is classified as (a) residential and (b) nan residential....
-
The following data are based on a month of samples, each with n=6, taken from a process that produces O-rings. The measurements are the last three digits. For example, X-297 is actually 1.4297 cm and...
-
How to find the Efficiency variance for all the variable costs ? Given the following information: If you need, here is a link to the excel documents Job Type Band Major Repairs Band Minor Repairs...
-
Q9. Prove that: cot 4x(sin 5x + sin 3x) = cotx (sin 5x - sin 3x) Q10. Show that sin-13-sin-1 = 84 17 85
-
b) A horizontal Venturimeter with inlet diameter 20 cm and throat diameter 10 cm is used to measure the flow of 5 water. The U-tube differential manometer is attached having Hg as a manometric fluid....
-
Your roommate, Cassie Helbrecht, is confused about sunk costs. Explain to your roommate the meaning of sunk costs and their relevance to a decision to retain or replace equipment.
-
Your roommate, Bill Blair, contends that accounting contributes to most of the steps in management's decision-making process. Is your roommate correct? Explain.'
-
Ansara Company sells two products, X and Y. Their unit contribution margins are \($52\) and \($70\). respectively, and their sales mix is 2:1. What is the weighted average unit contribution margin?
![Mobile App Logo](https://dsd5zvtm8ll6.cloudfront.net/includes/images/mobile/finalLogo.png)
Study smarter with the SolutionInn App