Options for the last part: direct labor, direct materials, expected unit sales, production units, total sales, unit selling price
Pottery Cullumber Inc. has been manufacturing its own finials for its curtain rods. The company is currently operating at 100% of capacity and variable manufacturing overhead is charged to production at the rate of 60% of direct labor cost. The direct materials and direct labor cost per unit to make a pair of finials are $4 and $5, respectively. Normal production is 26,600 curtain rods per year. A supplier offers to make a pair of finials at a price of $13.25 per unit. If Pottery Cullumber accepts the supplier's offer, all variable manufacturing costs will be eliminated, but the $42.600 of fixed manufacturing overhead currently being charged to the finials will have to be absorbed by other products. Prepare the incremental analysis for the decision to make or buy the finials. (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses eg. (45).) Net Income Increase (Decrease) Make Buy Direct materials Direct labor Variable overhead costs Fixed manufacturing costs Purchase price Total annual cost Should Pottery Cullumber buy the finials? Pottery Cullumber should the finials. Would your answer be different in (b) if the productive capacity released by not making the finials could be used to produce income of $37,750? income would by$ Donna Clark, a recent graduate of Bell's accounting program, evaluated the operating performance of Pharoah Company's six divisions. Donna made the following presentation to Pharoah's board of directors and suggested the Percy Division be eliminated. "If the Percy Division is eliminated," she said, "our total profits would increase by $27,100. The Other Five Divisions Percy Division Total Sales Cost of goods sold Gross profit $1,665,000 $100,100 978,700 76,700 586.300 23.400 528.700 50.500 $157,600 S (27.100) $1,765.100 1,055.400 709,700 579200 $130,500 Operating expenses Net income In the Percy Division, cost of goods sold is $60,100 variable and $16.600 fixed, and operating expenses are $30.400 variable and $20,100 fixed. None of the Percy Division's faced costs will be eliminated if the division is discontinued. Is Donna right about eliminating the Percy Division? Prepare a schedule to support your answer. (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses eg. (45).) Net Income Increase (Decrease) Continue Eliminate Sales Variable costs Cost of goods sold Operating expenses Total variable Contribution margin Fixed costs Cost of goods sold Operating expenses Total fixed Net income (loss) Donnais correct Incorrect e Textbd Carla Vista Company estimates that unit sales will be 10,700 in quarter 1, 13,100 in quarter 2, 14,200 in quarter 3. and 18,300 in quarter 4. Using a sales price of $84 per unit. Prepare the sales budget by quarters for the year ending December 31, 2020 CARLA VISTA COMPANY Sales Budget Quarter Year
