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Culver Company is a leading manufacturer of sunglasses. One of Culver's products protects the eyes from ultraviolet rays. An upscale sporting goods store has contacted Culver about purchasing 16,700 pairs of these sunglasses. Culver's unit manufacturing cost, based on a full capacity of 114,000 units, is as follows: Direct materials Direct labor Manufacturing overhead (60% fixed) Total manufacturing costs $7 5 20 $32 Culver also incurs selling and administrative expenses of $79,510 plus $3 per pair for sales commissions. The company has plenty of excess manufacturing capacity to use in manufacturing the sunglasses. Culver's normal price for these sunglasses is $45 per pair. The sporting goods store has offered to pay $35 per pair. Since the special order was initiated by the sporting goods store, no sales commission will be paid. What would be the effect on Culver's income if the special order were accepted? Culver's income will by $ Every year Marigold Industries manufactures 6,100 units of part 231 for use in its production cycle. The per unit costs of part 231 are as follows: $4 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total 10 6 10 $30 Flintrock, Inc., has offered to sell 6,100 units of part 231 to Marigold for $34 per unit. If Marigold accepts Flintrock's offer, its freed- up facilities could be used to earn $10,700 in contribution margin by manufacturing part 240. In addition, Marigold would eliminate 40% of the fixed overhead applied to part 231. (a) Calculate total relevant cost to make and net cost to buy. Total relevant cost to make $ Net relevant cost to buy $ (6) Should Marigold accept Flintrock's offer? Blossom's Wind Toys manufactures decorative kites, banners, and windsocks. During the month of January, Blossom received orders for 3,000 Valentine's Day banners and 1,300 Easter kites. Because several sewing machines are in the shop for repairs, Blossom has only 1,000 sewing machine hours available for production of these orders. Each Valentine's Day banner sells for $12. The banners take one hour to sew and have a total variable cost of $10 per banner. The Easter kites sell for $15. They take 15 minutes to sew and have a total variable cost of $14. (a) With only 1,000 sewing machine hours available, how many units should Blossom produce for the below items? Kites Banners Based on your calculations above, which products should Wendy prioritize for production in January? In response to a growing awareness of gluten allergies, Sunland Bakery tried using gluten-free flour in its three most popular cookies. After several attempts and a lot of inedible cookies, the company perfected new recipes that yield delicious gluten-free cookies. The costs of producing a batch of 100 cookies are as follows: Sales price Variable cost Fixed cost Total cost Gross profit Pounds of flour Chocolate Chip $130.80 $81 19 100.00 Sugar $111.60 $63 16 79.00 $32.60 Oatmeal Raisin $131.90 $89 20 109.00 $22.90 1.5 $30.80 2 2 Assuming no raw material constraints and unlimited demand for cookies, calculate contribution margin per batch for Chocolate Chip, Sugar, Oatmeal Raisin cookies. (Round answers to 2 decimal places, eg. 52.75.) Cookies Contribution Margin Chocolate Chip $ Sugar $ Oatmeal Raisin What type of cookie would maximize the company's contribution margin? eTextbook and Media Assume that, based on typical customer demand, Sunland will sell 11,500 batches of chocolate chip cookies, 7,500 batches of sugar cookies, and 9,500 batches of oatmeal raisin cookies. What will the company's contribution margin be? The company's contribution margin $ $ e Textbook and Media Sunland's flour supplier has announced a shortage of gluten-free flour. As a result, Sunland will only be able to purchase 37,250 pounds of flour How many batches of each type of cookie should the company bake? Batches Chocolate Chip Sugar Oatmeal Raisin What will the company's contribution margin be? $ The company's contribution margin eTextbook and Media If Sunland uses gluten-free flour in other products, will the allocation you recommend in part (c) change? Ivanhoe Trivia Co. manufactures and sells two trivia products, the Square Trivia Game and the Round Trivia Game. Last quarter's operating profits, by product, and for the company as a whole, were as follows: Sales revenue Variable expenses Contribution margin Fixed expenses Operating income Square $17.200 4.640 12,560 2.790 $9.770 Round $6,950 2.930 4,020 4,200 $(180) Total $24.150 7.570 16,580 6,990 $ 9,590 Forty percent of the Round Game's fixed costs could have been avoided if the game had not been produced or sold. If the Round Game had been discontinued before the last quarter, what would operating income have been for the company as a whole? $ Operating income without round Carla Vista Packaging Company is a leading manufacturer of cardboard boxes and other product packaging solutions. One of the company's major product lines is custom-printed calce bakes that are sold to some of the country's best known baliveries at a price of $0.50 per book. To maintain its high-quality image, Carla Vista uses a thick premium coated paper for all of its cake boxes. Based on annual production of 1,000,000 boxes, Carla Vista's cost for producing a box is as follows: Paper Ink Direct labor Variable overhead Fixed overhead Total cost per box $0.14 0.05 0.04 0.07 0.09 $0.39 Andrea Borden, a recent graduate of the Culinary Institute of America, is opening a new bakery in her hometown. She recently contacted Brad Lail, Carla Vista's top salesperson about purchasing cake boxes for her new store. Brad described Carla Vista's boxes, emphasizing the high-quality paper and the unique printing process the company uses. Andrea is looking for ways to lower her operating costs, so after hearing Brad describe Carla Vista's boxes, she told him that all she needed was a simple, unprinted box. Andrea also told Brad that she needs 11.400 boxes and is willing to pay $0.23 per box (a) Based on Andrea's offer of $0.23 per box for an unprinted box should Carla Vista accept Andrea's order? Carla Vista currently has excess production capacity and can easily accommodate Andrea's order in the production schedule. Carla Vista accept the order (b) Since Andrea wants a simple box, Brad is exploring using a lighter-weight paper for her boxes. He has found a suitable paper that will cost $0.09 per booc If Carla Vista uses this lighter-weight paper for Andrea's boxes, should the company accept Andrea's order at aprice of $0.23 per box? Carla Vista currently has excess production capacity and can easily accommodate Andrea's order in the production schedule Carla Vista accept the order. (c) After visiting with Andrea Brad received a fax from one of London's top bakeries. The bakery's normal box supplier suffered some fire damage and is unable to ship the bakery's order of 11,600 bakes this month. The bakery's owner is asking if Carla Vista can fill a onetime rush order of 11,600 boxes printed with the bakery's logo. The bakery is willing to pay a 10% price premium to expedite the order. If Carla Vista accepts the order, it will incur $790 in export taxes and shipping. Calcuate the Profit on special order. $ Profit on special order Should Carla Vista accept the London bakery's offer? Carla Vista accept the special order Blossom Water Co. is a leading producer of greenhouse irrigation systems. Currently, the company manufactures the timer unit used in each of its systems. Based on an annual production of 40,420 timers, the company has calculated the following unit costs. Direct fixed costs include supervisory and clerical salaries and equipment depreciation. $12 Direct materials Direct labor Variable manufacturing overhead Direct fixed manufacturing overhead Allocated fixed manufacturing overhead Total unit cost 6 3 10 (30% salaries, 70% depreciation) 7 $38 Clifton Clocks has offered to provide the timer units to Blossom at a price of $36 per unit. If Blossom accepts the offer, the current timer unit supervisory and clerical staff will be laid off. (a1) Calculate the total relevant cost to make or buy the timer units. (Round answers to O decimal places, eg. 5,250.) Make Buy Total relevant cost