Melrose Sunglasses sell for about $156 per pair. Suppose that the company incurs the following average costs per pair: :(Click the icon to view the cost information.) Melrose has enough idle capacity to accept a one-time-only special order from Alaska Shades for 20,000 pairs of sunglasses at $83 per pair. Melrose will not incur any variable selling expenses for the order. Read the requirements Requirement 1. How would accepting the order affect Melrose's operating income? In addition to the special order's effect on profits, what other (longer-term qualitative) factors should Melrose's managers consider in deciding whether to accept the order? Prepare the analysis to determine the effect on operating income. (Enter decreases to profits with a parentheses or minus sign.) Expected increase in revenues sunglasses x Expected increase in expenses sunglasses x Data Table - X Expected in operating income i Requirements - X Direct materials S 44 Direct labor 10 Variable manufacturing overhead 7 1. How would accepting the order affect Melrose's operating income? In addition to the special Variable selling expenses order's effect on profits, what other (longer-term qualitative) factors should Melrose's managers consider in deciding whether to accept the order? 325 Fixed manufacturing overhead 2. Melrose's marketing manager, Peter Smith, argues against accepting the special order because S 89 the offer price of $83 is less than Melrose's $89 cost to make the sunglasses. Smith asks you, as Total cost one of Melrose's staff accountants, to explain whether his analysis is correct. What would you - $2,200,000 Total fixed manufacturing overhead / 88,000 Pairs of say? sunglasses Print Done Print DoneSuppose the Baseball Hall of Fame in Cooperstown, New York, has approached Alley - Cardz with a special order. The Hall of Fame wishes to |Alley - Cardz's total production cost is $0.58 per pack, as follows: purchase 54,000 baseball card packs for a special promotional campaign and offers $0.38 per pack, a total of $20,520 (Click the icon to view the cost information.) Alley - Cardz has enough excess capacity to handle the special order. Read the requirements Requirement 1. Prepare a differential analysis to determine whether Alley - Cardz should accept the special sales order. (Enter decreases to profits with a parentheses or minus sign.) Expected increase in revenues Expected increase in expenses Variable manufacturing cost: i Data Table - X packs x Expected in operating income Variable costs: Requirements - X Direct materials S 0.15 Direct labor 0.10 Variable overhead 0.08 0.25 1. Prepare a differential analysis to determine whether Alley - Cardz should Fixed overhead accept the special sales order. S 0.58 Total cost 2. Now assume that the Hall of Fame wants special hologram baseball cards. Alley - Cardz will spend $5. 100 to develop this hologram, which will be useless after the special order is completed. Should Alley - Cardz accept the special order under these circumstances, assuming no change in the special Print Done pricing of $0.38 per pack? Print Done Choose from any list or enter any number in the input fieldsSteinbarr Builders builds 1,500-square-foot starter tract homes in the fast-growing suburbs of Atlanta. Land and labor are Steinbarr Builders would like to earn a profit of 16% of the variable cost of each home sold. Similar homes offered by cheap, and competition among developers is fierce. The homes are a standard model, with any upgrades added by the competing builders sell for $208,000 each. Assume the company has no fixed costs. buyer after the sale. Steinbarr Builders's costs per developed sublot are as follows: (Click the icon to view the costs.) Read the requirements. Requirement 1. Which approach to pricing should Steinbarr Builders emphasize Aur Steinbarr Builders will need to emphasize a target-costing approach to pricing Requirements - X e tract homes are not unique and face stiff competition. Requirement 2. Will Steinbarr Builders be able to achieve its target profit levels? Data Table - X 1. Which approach to pricing should Steinbarr Builders emphasize? Why? Begin by calculating the target cost. 2. Will Steinbarr Builders be able to achieve its target profit levels? Market price of similiar homes 3. Bathrooms and kitchens are typically the most important selling features of a home. Steinbarr Builders could differentiate the homes by upgrading the bathrooms and kitchens. Less: Desired profit The upgrades would cost $26,000 per home but would enable Steinbarr Builders to Land $ 51,000 increase the sales prices by $45,500 per home. (Kitchen and bathroom upgrades typically 120,000 Target full cost per home Construction add about 175% of their cost to the value of any home.) If Steinbarr Builders makes the upgrades, what will the new cost-plus price per home be? Should the company differentiate Landscaping 3,000 its product in this manner? Variable selling costs 6,000 Print Done Print DoneTop managers of Movies are Best are alarmed by their operating losses. They are considering dropping the DVD product line. Company accountants have prepared the following analysis to help make this decision: (Click the icon to view the analysis.) Total fixed costs will not change if the company stops selling DVDS. Read the requirements. Requirement 1. Prepare a differential analysis to show whether Movies are Best should drop the DVD product line. i Data Table -X Begin by preparing a differential analysis to show whether Movies are Best should drop the DVDs product line. (Enter decreases Expected decrease in revenues-Dropping DVDs Movies are Best Expected decrease in costs-Dropping DVDs Income Statement Expected in operating income For the Year Ended December 31, 2018 Total Blu-ray Discs DVD Discs Net Sale 433,000 $ 306,000 $ 127,000 i Requirements - X Variable Costs 245,000 150,000 95,000 Contribution Margin 188,000 156,000 32,000 1. Prepare a differential analysis to show whether Movies are Best should Fixed Costs: drop the DVD product line. Manufacturing 130,000 77,000 53,000 2. Will dropping DVDs add $31,000 to operating income? Explain. Selling and Administrative 66,000 56,000 10,000 Total Fixed Expenses 196,000 133,000 63,000 Choose from any list Print Done Operating Income (Loss) $ (8,000) $ 23,000 $ (31,000)Top managers of Movies are Best are alarmed by their operating losses. They are considering dropping the DVD product Assume that Movies are Best can avoid $40,000 of fixed costs by dropping the DVD product line (these costs are direct line. Company accountants have prepared the following analysis to help make this decision: fixed costs of the DVD product line). (Click the icon to view the analysis.) Prepare a differential analysis to show whether Movies are Best should stop selling DVDs. (Enter decreases to revenues with a parentheses or minus sign.) Expected decrease in revenues Data Table - X Expected decrease in costs: Variable costs Fixed costs Movies are Best Expected decrease in total costs Income Statement For the Year Ended December 31, 2018 Expected in operating income Total Blu-ray Discs DVD Discs Net Sales Revenue $ 422,000 $ 302,000 $ 120,000 Variable Costs 254,000 159,000 95,000 Contribution Margin 168,000 143,000 25,000 Fixed Costs: Manufacturing 125,000 73,000 52,000 Selling and Administrative 68,000 57,000 11,000 Total Fixed Expenses 193,000 130,000 63,000 Choose from any list or enter any number in the input fields and then click Check Answ Operating Income (Loss) $ (25,000) $ 13,000 $ (38,000)