Chapter 10:

Special Order: iPeach Inc., sells a single product for $146 per unit. At an operating level of 10,000 units, variable costs are $38 per unit and fixed costs of $150,000.

iPeach has been offered a price of $150 per unit on a special order of 1,500 units by Vericon Stores, which would use its own brand name on the item. If iPeach accepts the order, material cost will be $1 more per unit than for regular production. However, special labeling equipment costing $3,000 would be needed to process the order; the equipment would then be discarded.

Assuming that volume remains within the relevant range, prepare an analysis of differential revenue and costs to determine whether iPeach should accept the special order.

Question 12

Should iPeach accept the special order?

Yes, It will make additional revenue of $103,420.

None of the Choices

No, there will make a loss of $225,000

No, there will make a loss of $58,500.

Yes, it will make additional revenue of $163,500.

Question 13

What is the contribution margin on the special order?

None of the Choices

$58,500

$150,000

$31,700

$41,350

Chapter 7:

Total Pops data show the following information:

Jan.

Estimated Sales (units) 15,000

Sales Price Per Unit $45

Direct Labor Per Unit $3

Labor Rate Per Hour. $18

The manager asked that we produce 2,900 extra units in case we get a last minute order and also purchase extra 4,440 pounds of material (desired ending inventory). Direct material requires 2 pounds per unit at a cost of $3 per pound. In January, the beginning inventory is 3,000 units of finished goods and 4,470 pounds of material. Prepare a production budget and direct materials budget.

Question 7

In the Production Budget, what is the unit production required?

None of the Choices

3,000 Units

15,000 Units

13,000 Units

14,900 Units

Question 8

What is the Total Material Purchases required in the Direct Materials Budget?

$34,240

$29,770

$89,310

None of the Choices

$44,700