Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I need help in no 4) and 5) if someone can help me? b. Would the increased fixed selling expenses be justified? Yes No 2.

I need help in no 4) and 5) if someone can help me?
image text in transcribed
image text in transcribed
image text in transcribed
b. Would the increased fixed selling expenses be justified? Yes No 2. Assume again that Ovation Company has sufficient copacity to produce 86.400 Bits each year. A customer in foreign market wants to purchase 14,400 Bits. Import duties on the Bits would be $1.70 per unit, and costs for permits and licences would be $6,480. Both import duties and permits and licenses will be paid by Ovation. The only selling costs that would be associated with the order are $2.10 per unit shipping cost. Compute the per unit break-even price on this order. (Do not round your intermediate calculations. Round your answer to 2 decimal places.) 4. Due to a strike in its supplier's plant, Ovation Company is unable to purchase more material for the production of Bits. The strike is expected to last for two months. Ovation Company has enough material on hand to operate at 30% of normal levels for the two-month period. As an aiternative, Ovation could close its plant down entirely fo the two months. If the plant were closed, fixed manufacturing overhead costs would continue at 60% of their normal level during the two-month period and the fixed selling expenses would be reduced by 20%. What would be the impact on profits of closing the plant for the two-month period? (input the amount as a positive value. Do not round your intermediate calculations.) 5. An outside manufacturer has offered to produce Bits and ship them directly to Ovation's customers. If Ovation Company accepts this offer, the facilities that it uses to produce Bits would be idile: however, fixed manufacturing overhead costs would be reduced by 70%. Since the outside manufacturer would pay for all shipping costs, the variable selling expenses would be only two thirds of their current amount. Compute the unit cost that is relevant

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Tax Audit Approach And Due Diligence Related To Tax Credits

Authors: Mohamed Ben Sassi

1st Edition

6204246941, 978-6204246949

More Books

Students also viewed these Accounting questions