Chapter 20 1 Roland Company operates a small factory in which it manufactures two products: A and B. Production and sales result for last year were as follow Units sold 8,000 16,000 Selling price per unit 65 52 Variable costs per unit 35 30 Fixed costs per unit 15 15 For purposes of simplicity, the firm alocates total fixed costs over the total number of units of A and B produced and sold. The research department has developed a new product (C) as a replacement for product B. Market studies show that Roland Company could sell 11.000 units of next year at a price of $80, the variable costs per unit of Care $39. The introduction of product will lead to a 10% increase in demand for product and discontinuation of products. If the company does not introduce the new product, it expects next year's result to be the same as last year's Instructions Should Roland Company introduce product next year? Explain why or why not. Show calculations to support your decision Grege Company supplies Schools with floor mattresses to use in physical education classes. Gregg has received a special order from a large school district to buy 600 mats at $45 each. Acceptance of the special order will not affect faed costs but wil result in $1,200 of shipping costs. For the first 6 months of 2016, the company reported the following operating results while operating at 80% capacity: Sales (100,000 units) $7,000,000 Cost of goods sold 4,200.000 Gross profit 2,800,000 Operating expenses 2.000.000 Net income $800.000 Cost of goods sold was 75% variable and 25 fed operating expenses were 70% variable and 30% fixed Ex 183 cont) Instructions (a Prepare an incremental analysis for the special order. Should Gregg Company accept the special order? Justify your answer Muhe Bicycle Company has been manufacturing its own seats for bicycles. The company is currently operating at 100% capacity, and variable manufacturing overhead is charged to production at the rate of cox of direct labor cost. The direct materials and direct labor cost per unit to make the bicycle seats are $8.00 and $9.00, respectively. Normal production is 50,000 bicydes per year A wupplier offers to make the bicycle was a price of 521 each of the bityce company accepts this offer, all variable manufacturing costs will be eliminated, but the $10,000 of feed manufacturing overhead currently being charged to the bicycle seats will have to be absorbed by other products. Instructions Prepare the incremental analysis for the decision to make or buy the bicycle seats Should Khe Bicycle Company buy the seats from the outside supplier? Justify your