Answered step by step
Verified Expert Solution
Question
1 Approved Answer
need help to show how to culculate overhead, selling expenses, and administrative expenses. Calla Company produces skateboards that sell for $54 per unit. The company
need help to show how to culculate overhead, selling expenses, and administrative expenses.
Calla Company produces skateboards that sell for $54 per unit. The company currently has the capacity to produce 100,000 skateboards per year, but is selling 81,800 skateboards per year. Annual costs for 81,800 skateboards follow. Direct materials Direct labor Overhead Selling expenses Administrative expenses Total costs and expenses $ 916,160 728,020 949,800 559,800 465,000 $3,617,180 A new retail store has offered to buy 18,200 of its skateboards for $49 per unit. The store is in a different market from Calla's regular customers and would not affect regular sales. A study of its costs in anticipation of this additional business reveals the following: . Direct materials and direct labor are 100% vartable, 40 percent of overhead is fixed at any production level from 81,800 units to 100,000 units; the remaining 60% of annual overhead costs are vartable with respect to volume, . Selling expenses are 70% variable with respect to number of units cold, and the other 30% of selling expenses are fixed. There will be an additional $260 per unit selling expense for this order. Administrative expenses would increase by a $990 fixed amount Required: 1. Prepare a three-column comparative Income statement that reports the following a. Annual Income without the special order b. Annual Income from the special order. c Combined annual income from normal business and the new business, 2 Should Calle accept this order? D. Annual income from the special order. Combined annual Income from normal business and the new business. 2 Should Calla accept this order? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a three-column comparative income statement that reports the following: a. Annual income without the special orders b. Annual income from the special order. c. Combined annual income from normal business and the new business. (Do not round your intermediate calculations. Round your cost and expenses to nearest whole number:) Show less CALLA COMPANY COMPARATIVE INCOME STATEMENTS Normal Volume Additional Volume Combined Total 4,417.2005 891,800 $ 5.309,000 Sales Costs and expenses Direct materials Direct labor Overhead Selling expenses Administrative expenses 203,840 161,080 016.160 728,020 949,000 550,000 465,000 1.120,000 890.000 040,000 550,000 465,000 Total costs and expenses Operating income 3,617,180 800.020s 385,820 3,983.000 525,080 $ 1.320.000 Required 2 > Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started