Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Anchor Company manufactures a variety of tool boxes. The firm is currenty operating at 80% of its fuli capacity of 6.450 machinehours per month. Each

image text in transcribed
image text in transcribed
Anchor Company manufactures a variety of tool boxes. The firm is currenty operating at 80% of its fuli capacity of 6.450 machinehours per month. Each unit requires 30 minutes of machine time. Its sales manager has been looking for special orders to make productive use of the excess capacity. JCL Ltd, a potential customer, has offered to buy 10,000 tool boxes at $13.10 per box, provided that the entire quantity is delivered in two months. The curtent per-box cost data are as follows. Both fixed and varlable overhesd are allocated using cirect labour hours as a base. Variable overhead is $290 per direct labour-hour Without the order. Anchor would have enough business to operate at 5160 direct labout-hours in each of the next tvio months The reguiar selling price or the tool boxes is $1610. A sales commission of 50 cents per unit is paid to sates representatives an all regular sales No additional seling or administative expenses are anticipated on account of acceptino this special order and no commissions will be paid on this speciat ordef. The procuction manager is conceined abour the tabour time that 10,000 boves would require. She cannot schedule overtune because Anchor has a policy agoinst it. JCL will not accept fewer than 10,000 tool boxes. Theicfort. in order to fill the spectal order, it would be necessay for Anchor Compony to divert some of it I Egular sales to the special arder Required: bienk - bucertain to enter " 0 " whetever required.? 1.b. Based on financial considerations. Should Anchor accept the orcer? Accent Not Accept 2. Thas part of the ausstion is not part of yout Connecr ast grment

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions