Question
Genia Enterprises, Inc. has the capacity to produce 12,000 units per year. Expected operations for the year are Sales (10,000 units @ $20) $200,000 Manufacturing
Genia Enterprises, Inc. has the capacity to produce 12,000 units per year. Expected operations for the year are
| Sales (10,000 units @ $20) | $200,000 |
| Manufacturing expenses: |
|
| Variable | $8 per unit |
| Fixed | $40,000 |
| Marketing expenses: |
|
| Variable | $3 per unit |
| Fixed | $20,000 |
REQUIRED:
| a. | What is the expected level of operating profits? |
| b. | Should the company accept a special order for 1,000 units at a selling price of $15 if variable marketing expenses associated with this special order would be $2 per unit? Calculate the incremental profits if the order is accepted. |
| c. | Suppose the company received a special order for 3,000 units at a selling price of $15 with no variable marketing expenses. Calculate the impact on operating profits.Note that the expected level of operations for the company is 10,000 units, maximum capacity of production for the company is 12,000 units. |
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Managerial Accounting Wileyplus Blackboard Student Package
Authors: Charles E. Davis, Elizabeth Davis
3rd Edition
1119342511, 978-1119342519
