Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

I need these questions answered in a word format along with the excel spreadsheet. ACT 5140 Accounting for Decision Makers - Homework 6 Question 1

I need these questions answered in a word format along with the excel spreadsheet.

image text in transcribed ACT 5140 Accounting for Decision Makers - Homework 6 Question 1 Consider the following per unit amounts based upon the monthy capacity of Category Variable Manufacturing Costs Fixed Manufacturing Costs Variable Selling Costs Fixed Selling Costs $ $ $ $ 600,000 units $/Unit Total 26.00 6.00 $3,600,000 11.00 7.00 $4,200,000 Capacity cannot be added in the short run and the firm currently sells the product for $ 60.00 per unit The company is currently producing 550,000 units per month. A potential customer has contacted the firm and offered to purchase 60,000 units this month only The customer is willing to pay $ 35.00 per unit Since the potential customer approached the firm, there will be no variable selling costs incurred. Should the company accept the special order? Why or why not? Be specific in your answer showing your work in a financial format. How much money can the company expect to earn (lose) with the additional transaction? Show your work Part 2 of this question: Which variables are relevant and explain why you find them to be relevant. Question 2 Consider the following per unit amounts based upon the monthy capacity of Category Variable Manufacturing Costs Fixed Manufacturing Costs Variable Selling Costs Fixed Selling Costs $ $ $ $ 500,000 units $/Unit Total 21.00 4.00 $2,000,000 5.00 3.00 $1,500,000 Capacity cannot be added in the short run and the firm currently sells the product for $ 43.00 per unit The company is currently producing 480,000 units per month. A potential customer has contacted the firm and offered to purchase 50,000 units this month only The customer is willing to pay $ 36.00 per unit Additional selling costs by the company will not be incurred because the buyer will pick up the order themselves Should the company accept the special order? Why or why not? Be specific in your answer showing your work in a financial format. How much money can the company expect to earn (lose) with the additional transaction? Show your work Question 3 A consulting company performs a "basic" market analysis for a client The company incurrs cost of $350,000 in performing the analysis and plans to sell the report to the client for $500,000 After reviewing the intial report, the client asks the firm if it is willing to do a more extensive report The client offers to pay the consulting company a much higher amount of, $750,000 to include the additional work If the more extensive report the consulting company estimates that incremental costs of $200,000 would be required to do the additional work Should the consulting company agree to do the more extensive report? How much money can the company expect to earn (lose) with the additional transaction? Show your work Question 4 Assume an engineering company provides services for three types of clients. Each service requires a different amount of a specific form of specialized labor that is in limited supply. If the company is limited to 15,000 hours of the specialized labor, how many clients of each type Questions Should the engineering company accept in order to maximize operating income? Also show your calculations for the following: 1. List the type of client that should be served first, second and third 2. Number of hours used for the special labor by each client type 3. Number of customers serviced by each client type 4. Contribution margin dollars to be expected by each client type and total 5. Contribution margin dollars to be expected in total Client Type Revenue per client Variable Cost per client Specialized Labor hours required per client Maximum clients available Job $2,000 $800 Wholesale $3,900 $1,400 Retail $5,300 $2,700 6 200 14 400 15 600

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

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

Step: 2

blur-text-image

Step: 3

blur-text-image

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

Global Strategy

Authors: Mike W. Peng

5th Edition

0357512367, 978-0357512364

Students also viewed these Accounting questions