MANAGERIAL ACCOUNTING CASE
Please help to answer task 3 based on the case facts provided:
Note:
-MH is the machine hours available as production capacity is limited.
-there are 145,000 MH available in a year.
BU-'i? Fall 202i] Cass Assignment 2 Bebe Suite Limited Bebe Suite Ltd. (ESL) manufactures baby cribs and sells them to retail stores across Canada. ESL manufactures three different models in a single factory in Laval, Quebec. The models are distinguished by the quality of materials used and the sophistication of the design. The cribs vary in price; the Piper model is the most basic and cheapest, the Paxton is a midpricepoint product, and the Berkley is the most expensive model. Quality control is critical for ESL, as it must meet the strict safety requirements for baby cribs in Canada. ESL prides itself on not just meeting but exceeding the minimum requirements. Industry surveys have shown that safety is the most important factor for parents when buying a crib. In addition to product quality. ESL has a strong reputation for excellent customer service and timely delivery. It is January 31, 202i], and you. CPA, work for a consulting rm, Lancaster 3; Partners LLP. You are meeting with Jenny Wang, the controller of BEL. Jenny asks you to help her with a number of items in preparation for an upcoming board of directors meeting. Jenny infon'ns you that sales have grown to the point where BSL is now operating at capacity and is struggling to meet demand. Jenny provides you with the following statement of income by product line for the year ended December 31, 2o1s. The average selling prices were $300. $46G, and $650 for the Piper, Paxton. and Berkley models, respectively. Piper Paxton Berkley Total Sales $18,987,000 $19,425,800 $20,475,000 $58,887,800 Direct material 5,715,000 6,518,000 6,575,000 18,808,000 Direct labour 3,430,000 4,063,000 4,705,000 12, 198,000 Variable MOH 3,1 12,000 2,667,000 2,240,000 8,019,000 Fixed MOH* 205,800 243,780 282,300 731,880 Fixed selling and 1,139,220 1, 165,548 1,228,500 3,533,268 administrative** * Fixed MOH is allocated based on direct labour costs. * Fixed selling and administrative is allocated based on sales. Adapted from CPA Canada 2019-11-12Task #3 Best Price, a big box store. has approached ESL about a special order. Best Price would like BSL to manufacture a crib for its in-house brand, Modo Plus. The order would be for 10,000 units. The product development team has reviewed the specications provided by Best Price and estimates that it will cost $20,000 to design a suitable crib.The team has provided the following cost estimates related to the order: Materials $19.00 Direct labour $45.50 Variable MGH $45.00 0.?0 Calculate the minimum price that BEL should accept for the order as well as anyI other factors that should be considered
