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Bradford Rouse Sunglasses sell for about $153 per pair. Suppose the company incurs the following average costs per pair: F: (Click the icon to view
Bradford Rouse Sunglasses sell for about $153 per pair. Suppose the company incurs the following average costs per pair: F: (Click the icon to view the cost information.) Bradford Rouse has enough idle capacity to accept a one-time-only special order from Nevada Glasses for 17,000 pairs of sunglasses at $65 per pair. Bradford Rouse will not incur any variable marketing expenses for the order. Read the requirements Requirement 1. How would accepting the order affect Bradford Rouse's operating income? In addition to the special order's effect on profits, what other (longer-term qualitative) factors should Bradford Rouse's managers consider in deciding whether to accept the order? Prepare an incremental analysis to determine the special order's effect on operating income. (Enter a "0" for any zero balances. Use parentheses or a minus sign to indicate a decrease in operating income from the special order.) Total Order Per Unit (17,000 units) Requirements Incremental Analysis of Special Sales Order Decision Revenue from special order Less variable expense associated with the order: Variable manufacturing costs Contribution margin Less: Additional fixed expenses associated with the order Increase (decrease) in operating income from the special order 1. How would accepting the order affect Bradford Rouse's operating income? In addition to the special order's effect on profits, what other longer-term qualitative) factors should Bradford Rouse's managers consider in deciding whether to accept the order? 2. Bradford Rouse's marketing manager, Jim Revo, argues against accepting the special order because the offer price of $65 is less than Bradford Rouse's $80 cost to make the sunglasses Revo asks you, as one of Bradford Rouse's staff accountants, explain whether his analysis is correct - X Data Table Print Done Direct materials. 39 Direct labor. 12 Variable manufacturing overhead. 11 Variable marketing expenses 2 16* Fixed manufacturing overhead 80 Total cost ......... * $2,300,000 total fixed manufacturing overhead : 143,750 pairs of sunglasses
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