Chapter 15 assignments 6 2 Required information Part 2 of 4(The following information applies to the questions displayed below) Badger Valve and Fitting Company, located in southern Wisconsin, manufactures a variety of industrial valves and pipe fittings that are sold to customers in nearby states. Currently, the company is operating at about 70 percent capacity and is eaming a satisfactory return on investment. Management has been approached by Glasgow Industries Ltd. of Scotland with an offer to buy 110,000 units of a pressure valve. Glasgow Industries manufactures a valve that is almost identical to Badger's pressure valve; however, a fire in Glasgow Industries' valve plant has shut down its manufacturing operations. Glasgow needs the 10000 valves over the next four months to meet commitments to its regular customers. Glasgow is prepared to pay $3160 each for the valves. Badger's total product cost, based on current attainable standards, for the pressure valve is $33.00, cakculated as follows: 3.12 points eBook Print Direct material $8.50 Direct labor Manufacturing overhead 10.00 14.50 Reference Total product $33.00 Manufacturing overhead is applied to production at the rate of $29 per standard direct-labor hour. This overhead rate is made up of the folowing components Variable manufacturing overheads 9.00 Fixed manufacturing overhead (traceable) rixed manufacturing overhead (allocated) 14.00 6.00 Applied manufacturing overhead29.00 Additional costs incurred in connection with sales of the pressure valve include sales commissions of 5 percent and freight expense of $140 per unit. However, the company does not pay sales commissions on special orders that come directly to management. In determining selling prices, Bedger adds a 35 percent markup to total product cost. This provides a $44.55 suggested seling price for the pressure valve. The Marketing Department, however, has set the current seling price at $43.05 in order to maintain market share. Production management believes that it can handle the Glasgow Industries order without disrupting es scheduled production. The order would, however, require additional fixed factory overhead of $16,50o per month in the form of supervision and clerical costs. If management accepts the order, 27,500 pressure valves will be manufactured and shipped to Glasgow Industries each month for the next four months. Glesgow's management hes agreed to pay the shipping charges for the valves. 2. Prepare an analysis showing the impact of accepting the Glasgow Industries ordet (Round "Per unit" answers to 2 decimal places.) Per 110,000 Variable costs Direct material Variable overhead Supervisory and clerica Chapter 15 assignments 6 2 Required information Part 2 of 4(The following information applies to the questions displayed below) Badger Valve and Fitting Company, located in southern Wisconsin, manufactures a variety of industrial valves and pipe fittings that are sold to customers in nearby states. Currently, the company is operating at about 70 percent capacity and is eaming a satisfactory return on investment. Management has been approached by Glasgow Industries Ltd. of Scotland with an offer to buy 110,000 units of a pressure valve. Glasgow Industries manufactures a valve that is almost identical to Badger's pressure valve; however, a fire in Glasgow Industries' valve plant has shut down its manufacturing operations. Glasgow needs the 10000 valves over the next four months to meet commitments to its regular customers. Glasgow is prepared to pay $3160 each for the valves. Badger's total product cost, based on current attainable standards, for the pressure valve is $33.00, cakculated as follows: 3.12 points eBook Print Direct material $8.50 Direct labor Manufacturing overhead 10.00 14.50 Reference Total product $33.00 Manufacturing overhead is applied to production at the rate of $29 per standard direct-labor hour. This overhead rate is made up of the folowing components Variable manufacturing overheads 9.00 Fixed manufacturing overhead (traceable) rixed manufacturing overhead (allocated) 14.00 6.00 Applied manufacturing overhead29.00 Additional costs incurred in connection with sales of the pressure valve include sales commissions of 5 percent and freight expense of $140 per unit. However, the company does not pay sales commissions on special orders that come directly to management. In determining selling prices, Bedger adds a 35 percent markup to total product cost. This provides a $44.55 suggested seling price for the pressure valve. The Marketing Department, however, has set the current seling price at $43.05 in order to maintain market share. Production management believes that it can handle the Glasgow Industries order without disrupting es scheduled production. The order would, however, require additional fixed factory overhead of $16,50o per month in the form of supervision and clerical costs. If management accepts the order, 27,500 pressure valves will be manufactured and shipped to Glasgow Industries each month for the next four months. Glesgow's management hes agreed to pay the shipping charges for the valves. 2. Prepare an analysis showing the impact of accepting the Glasgow Industries ordet (Round "Per unit" answers to 2 decimal places.) Per 110,000 Variable costs Direct material Variable overhead Supervisory and clerica
