Cost Accounting chapter 4 #2

Farmount Travel Gear produces backpacks and sels them to vendors who sel them under their own label The cost of one of its backpacks rolows Materials Labor Variable overhead Fxed overhead ($2,905,600 per year: 454,000 units pr year) $18 40 12 40 640 $42 60 Total Riverside Discount Mart, a chain of low-price stores, has asked Fairmount to supply it with 23,000 backpacks tor a special promotion Riverside is planning. Riverside has offered to pay Fairmount a unit paice of $46 per pack. The reguilar seling price is $64. The special order would require some modfication to the basic model. These modncations would ao3 s4 to per unn in material coSE, 31.30 per unit in labor cost, and $0.90 in variable overhead cost. Athough Fairmount has the capacity to produce the 23,000 units without aflecting ns regular production of 454,000 units, a one-tme rental of special testing equipment to meet Roverside's requirements would be needed. The equipment rental would be $85,800 and would alow Fainmount to test up to 54,000 uns Required: a. Prepare a schedule to show the impact of niang the Riverside order on Fairmont's profits for the year (Enter your ans entered as 5,400.4). Select option "higher or Tower", keeping status Quo as the base. Select none it there is no effecty wers in thousands rounded to 1 decimal place (i.e. 5,400,400 should be tatus Quo Alternative Difference Sales revenue $ 29.0% 30,1140 $ 1,058 0 Less varlable costs 835 5,629 2451 8 878 0 5 958 524.4 higher Materials Labor Variable overhead Total variable cost S16.4348 14 8365 Contribution margin Less Flxed costs Operating profitijloss) 5 12.621 2.905 6 9