Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

ASAP Please! 1. Corvette Products Corporation has received a request for a special order of 4,000 units of product X22 for $26.60 each. Product X22's

ASAP Please!

1. Corvette Products Corporation has received a request for a special order of 4,000 units of product X22 for $26.60 each. Product X22's unit product cost is $25.80, determined as follows:

Direct materials $2.40
Direct labor 7.70
Variable manufacturing overhead 6.80
Fixed manufacturing overhead 8.90
Unit product cost $25.80

Direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product X22 that would increase the variable costs by $3.00 per unit and that would require an investment of $23,000 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. If the special order is accepted, the company's overall net operating income would increase (decrease) by:

A. $3,200

B. $3,800

C. ($48,400)

D. ($31,800)

2. The Corvette Corporation has purchased a new donut maker. It cost $20,000 and has an estimated life of 10 years. The following annual donut sales and expenses are projected:

Sales $30,000
Expenses:
Flour, etc., required in making donuts $15,000
Salaries 8,000
Depreciation 2,000 25,000
Net operating income $5,000

Assume cash flows occur uniformly throughout a year except for the initial investment. The accounting (simple) rate of return on the new machine is closest to:

A. 15.0%

B. 23.3%

C. 16.7%

D. 25.0%

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

Auditing Today

Authors: Emile Woolf

3rd Edition

013052168X, 9780130521682

More Books

Students also viewed these Accounting questions

Question

3. Jessica said that (she, her) would like to see for herself.

Answered: 1 week ago