Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Anchor Company manufactures a variety of tool boxes. The firm is currently operating at 80% of its full capacity of 5,250 machine hours per
Anchor Company manufactures a variety of tool boxes. The firm is currently operating at 80% of its full capacity of 5,250 machine hours 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 $9.90 per box, prov that the entire quantity is delivered in two months. The current per-box cost data are as follows Direct materials Direct labour (hour at $8.40/hour) Total manufacturing overhead Total unit product cost $3.10 4.20 2.60 $9.90 Both fixed and variable overhead are allocated using direct labour-hours as a base. Variable overhead is $2.10 per direct labou Without the order, Anchor would have enough business to operate at 4,200 direct labour-hours in each of the next two mont regular selling price of the tool boxes is $12.90. A sales commission of 50 cents per unit is paid to sales representatives on all sales. No additional selling or administrative expenses are anticipated on account of accepting this special order and no commissi paid on this special order. The production manager is concerned about the labour time that 10,000 boxes would require. She cannot schedule overtim Anchor has a policy against it. JCL will not accept fewer than 10,000 tool boxes. Therefore, in order to fill the special order, necessary for Anchor Company to divert some of its regular sales to the special order. Required: -a. Prepare contribution margin income statements for the two-month period both with and without the special order. (Le blank - be certain to enter "O" wherever required.)
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