Need help with all of Requirement 2
CleanUp Corporation produces baseball bats for kids that it sells for $34 each. At capacity, the company can produce 44,000 bats a year. The costs of producing and selling 44,000 bats are as follows: (Click to view the costs.) Read the requirements .. Requirement 1. Suppose CleanUp is currently producing and selling 30,000 bats. At this level of production and sales, its fixed costs are the same as given in the preceding table. Ruth Corporation wants to place a one-time special order for 14,000 bats at $24 each. CleanUp will incur no variable selling costs for this special order. Should CleanUp accept this one-time special order? Show your calculations. Determine the effect on operating income if the order is accepted. (Enter decreases in operating income with parentheses or a minus sign.) Revenues from special order $ 336.000 Variable manufacturing costs (196,000) 140,000 Increase (decrease) in operating income if order is accepted CleanUp should accept Ruth's special order because it increases operating income by $ 140,000 Requirement 2. Now suppose CleanUp is currently producing and selling 44,000 bats. If CleanUp accepts Ruth's offer it will have to sell 14,000 fewer bats to its regular customers. (a) On financial considerations alone, should CleanUp accept this one-time special order? Show your calculations. (b) On financial considerations alone, at what price would CleanUp be indifferent between accepting the special order and continuing to sell to its regular customers at $34 per bat? (c) What other factors should CleanUp consider in deciding whether to accept the one-time special order? (a) On financial considerations alone, should CleanUp accept this one-time special order? Show your calculations Determine the effect on operating income if the order is accepted. (Enter decreases in operating income with parentheses or a minus sign.) Revenues from special order $ 336,000 Variable manufacturing costs (196,000) Contribution margin foregone -570000 -430000 Increase (decrease) in operating income if order is accepted - X x - X Data table and sales, Requirements arenthese Cost per Bat Total Costs Direct materials $ $ 10 $ 440,000 Variable direct manufacturing labor 3 132,000 Variable manufacturing overhead 1 1 44,000 Fixed manufacturing overhead 7 308,000 Variable selling expenses 1 44,000 4 Fixed selling expenses 176,000 $ 26 $ 1,144,000 Total costs 140,000 1. Suppose CleanUp is currently producing and selling 30,000 bats. At this level of production and sales, its fixed costs are the same as given in the preceding table. Ruth Corporation wants to place a one-time special order for 14,000 bats at $24 each. CleanUp will incur no variable selling costs for this special order. Should CleanUp accept this one-time special order? Show your calculations. 2. Now suppose CleanUp is currently producing and selling 44,000 bats. If CleanUp accepts Ruth's offer it will have to sell 14,000 fewer bats to its regular customers. (a) On financial considerations alone, should CleanUp accept this one-time special order? Show your calculations. (b) On financial considerations alone, at what price would CleanUp be indifferent between accepting the special order and continuing to sell to its regular customers at $34 per bat? (c) What other factors should CleanUp consider in deciding whether to accept the one-time special order? uth's offer il tinuing to ions. barenthese Print Done Print Done
