Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Kava Inc, manufactures Industrial components. One of its products, which is used in the construction of Industrial air conditioners, is known as K65. Data concerning

image text in transcribed

Kava Inc, manufactures Industrial components. One of its products, which is used in the construction of Industrial air conditioners, is known as K65. Data concerning this product are given below Per Unit $180 s 5 Selling price .... ... Direct materials ... Direct labour i n Variable manufacturing overhead. Fixed manufacturing overhead Variable selling expense.... Fixed selling and administrative expense ..... es 2 $ 17 The above per unit data are based on annual production of 4,000 units of the component. Direct labour can be considered to be a variable cost. The company has received a special, one-time-only order for 500 units of component K65. There would be no variable selling expense on this special order and the total fixed manufacturing overhead and fixed selling and administrative expenses of the company would not be affected by the order. Assuming that Kava has excess capacity and can fill the order without cutting back on the production of any product, what is the minimum price per unit on the special order below which the company should not go? a. S 180 b. 38 d. $78 ............ The company has received a special, one time only order for 500 units of component K65. There would be no variable selling expense on this special order and the total fixed manufacturing overhead and fixed selling and administrative expenses of the company would not be affected by the order. However, assume that Kava has no excess capacity and this special order would require 10 minutes of the constraining resource, which could be used instead to produce products with a total contribution margin of $11,000, what is the minimum price per unit on the special order below which the company should not go? a. $60 b. $81 c. $100 d. $22 Refer to the original data in the problem. What is the current contribution margin per unit for component K65 based on its selling price of $180 and its annual production of 4,000 units? a. $142 b. $102 C. $40 d. $140

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

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

Wiley CIA Essentials Of Internal Auditing Part 1 Exam Review 2023

Authors: S. Rao Vallabhaneni

1st Edition

1119987148, 978-1119987147

More Books

Students also viewed these Accounting questions

Question

Explain the process of MBO

Answered: 1 week ago

Question

Persuading Your Audience Strategies for

Answered: 1 week ago