Question
Cost Accounting - Special Order Decisions Please help answer the (2) blanks with shown work. Thanks Kindly! Example: Ellis Company makes boxed stationery and has
Cost Accounting - Special Order Decisions
Please help answer the (2) blanks with shown work. Thanks Kindly!
Example: Ellis Company makes boxed stationery and has capacity for 100,000 boxes. Currently, Ellis is producing 80,000 boxes. Information on price and costs is as follows:
Round intermediate calculations to the nearest cent. Use rounded answers in subsequent computations, if required.
Price | $2.48 |
Direct materials | $0.77 |
Direct labor | 0.74 |
Variable overhead | 0.17 |
Fixed overhead* | 1.10 |
*Fixed overhead is based on capacity of 100,000 boxes. |
A gift store chain recently came to Ellis Company and asked to have 10,400 boxes of stationery printed at a price of $1.92 per box. If Ellis Company accepts the special order, operating income will be $ **BLANK** higher
Now suppose that the gift store chain requires that a special imprinted seal must be put on each box. Direct materials will increase by $0.07 per box and Ellis can rent the machinery to imprint the seals for $2,149. If Ellis Company accepts the special order with this new requirement, operating income will be $ **BLANK** lower
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