How do you use the change in operating income to accept the special sales order? 1. Perfect Time Company manufactures and sells watches for $36 each Value Products Company has offered Perfect Time $16 per watch for a one time order of 1,000 watches. The total manufacturing cost per watch, using standard absorption costing, is $24 per unit, and consists of variable costs of $18 per watch and fixed overhead costs of $6 per watch. Assume that Perfect Time has excess capacity and that the special order would not adversely impact regular sales. What is the change in operating income that would result from accepting the special sales order? A) Increase of $2,000 B) Decrease of $18,000 C) Increase of S16,000 D) Decrease of $2,000 How do you compute the target variable costs per unit and target fixed costs? 1. Origami Company is a price-taker and uses target pricing. Please refer to the following information: Production volume 500,000 Units per year Market price $24.00 Per unit Desired operating profit 12e O f total assets Total asets $12,500,000 Variable cont per unit Fixed cost per year $3,000,000 Per year With the current cost structure, Origami cannot achieve its profit goals. It will have to reduce either the fixed costs or the ariable costs $17.00 Pe Asuming that fixed costs CANNOT be reduced how much will the target Cariable costs per unit be? Please round to nearest A) 51467 B) 516.25 C1 515.00 D51750 Polynesian Product sellis e 500,000 How do you compute the target variable costs per unit and target fixed costs? 1. Origami Company is a price-taker and uses target pricing. Please refer to the following information Production volume Units per year Market price $24.00 Per Desired operating profit Of total assets Total assets $12,500,000 Variable cost per unit $17.00 Fixed cost per year $3,000,000 Per year With the current cost structure, Origami cannot achieve its profit goals. It will have to reduce either the fixed costs or the variable corti Asuming that fixed costs CANNOT be reduced how much will the target variable costs per wat be? Please round to nearest omt) A) $14.67 B) $16.25 C) $15.00 D) $17.50 124 Perunt 1. Polynesian Products sells 1,800 kayaks per year at a price of $450 per unit. Polynesian sells in a highly competitive market and uses target pricing. The company has cal target full costat 5729.000 per year. Total variable costs are $396,000 per year and cannot be reduced. How much are the target find com? A) $265.000 B) $410,000 C)5396,000 D) $333,000 How do you calculate how many units should the company produce to maximize profits? 1. Easy Cook Company manufactures two product toaster ovens and bread machines. The following data sel Toaster Ovens Bread Machines le Sale price $60 $135 $35 S6 Variable costs Easy Cook can manufacture five toaster ovens per machine hour and three bread machines per machine bour Easy Cook's production capacity in 1,500 machine hours per month Marketing limitations indicate that Eary Cook can nella maximum of 5,000 tosters a month and 3.000 bread machines per month To maximize profits what product and how should the company produce in a month? A) 4 500 bread machines B) 2,500 toaster ovens and 3,000 bread machines C) 3,750 toer om and 2.250 bread machine D) 7,500 toaster ons How do you use the change in costs to accept choice? 1 Lincoln Company produces a part that is used in the manufacture of one of its products. The unit manufacturing costs of this part in a production level of 5.000 Direct materiale Direct labor (variable cost) Variable manufacturing overhead Fixed manufacturing overhead ale and that she Total cost Comen hus offered to sell 5,000 units of the same part to Lincoln Company for $13 perumit. Assuming the company has no other use for s costs are unavoidable, what should Lincoln Company do? Buy from Frides and save $1.20 per unit. B) Continue making the part in house C) Buy from Enckson and save $1.00 per mit D) B e ncan
