Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please help me with these 2 4 Exercise 23-8 Sell or process further LO A1 Cobe Company has already manufactured 28,000 units of Product A

please help me with these 2
image text in transcribed
image text in transcribed
image text in transcribed
4 Exercise 23-8 Sell or process further LO A1 Cobe Company has already manufactured 28,000 units of Product A at a cost of $28 per unit. The 28.000 units can be sold at this stage for $700,000. Alternatively, the units can be further processed at a $420,000 total additional cost and be converted into 5,600 units of Product B and 11.200 units of Product C. Per unit selling price for Product B is $105 and for Product C is 570. 1. Prepare an analysts that shows whether the 28,000 units of Product A should be processed further or not Answer is not complete. Sell as is Process Further $ 700.000$ 1,372.000 Sales Relevant costs Costs to process further 420.000 420,000 840,000 Total relevant costs Income (loss) Incremental net income (or loss) if processed further The company should 6 Problem 23-1A Analysis of income effects of additional business LO A1 25 points Jones Products manufactures and sells to wholesalers approximately 400.000 packages per year of underwater markers at $6 per package. Annual costs for the production and sale of this quantity are shown in the table Direct materials Direct Tabor Overhead Selline expenses Administrative expenses Total costs and expenses $ 576,000 144,00 320,000 158, eee 100,000 $1,290,000 A new wholesaler has offered to buy 50,000 packages for $5.20 each. These markers would be marketed under the wholesaler's name and would not affect Jones Products's soles through its normal channels, A study of the costs of this additional business reveals the following Direct materials costs are 100% variable Per unit direct labor costs for the additional units would be 50% higher than normal because their production would require overtime pay at 12 times the usual labor rate Twenty-five percent of the normal annual overhead costs are fixed at any production level from 350,000 to 500,000 units. The remaining 75% of the annual overhead cost is variable with volume. Accepting the new business would involve no additional selling expenses Accepting the new business would increase administrative expenses by a $5,000 fixed amount. Required: Complete the three-column comparative Income gratement that shows the following. (Do not round Intermediate calculations and round per unit cost answers to 2 decimal places.): 1. Annual operating income without the special order 2. Annual operating income received from the new business only 3. Combined annual operating income from normal business and the new business Answer is not complete. Per Unit Amounts Total Normal New Normal New Volume Business Volume Business 6.00's 5.20 $ 2.400.000 260,000 Combined $ 2,660,000 S Sales Variable costs Direct materials Direct labor Variable overhead Fixed overhead Contribution margin Contribution margin ololo 1.44 0.36 0.60 128 0 36 0.60 2.25 X 4.49 576.000 144,000 240,000 960,000 1,920,000 480,000 64,000 18,270 30,000 112,270 224 540 35,460 640.000 162 270 270,000 1,072270 2,144,540 515,460 X x 2.40 4.80 Forced costs Ann 6 25 points A new wholesaler has offered to buy 50,000 packages for $5 20 each These markers would be marketed under the wholesalers name and would not affect Jones Products's sales through its normal channels. A study of the costs of this additional business reveals the following Direct materials costs are 100% variable . Per unit direct labor costs for the additional units would be 50% higher than normal because their production would require overtime pay at 15 times the usual labor rate. . Twentyfive percent of the normal annual overhead costs are fixed at any production level from 350,000 to 500,000 units. The remaining 75% of the annual overhead cost is variable with volume. Accepting the new business would involve no additional selling expenses Accepting the new business would increase administrative expenses by a $5,000 fixed amount Required: Complete the three-column comparative come statement that shows the following. (Do not round Intermediate calculations and round per unit cost onswers to 2 decimal places.) 1. Annual operating income without the special order 2. Annual operating Income received from the new business only 3. Combined annual operating income from normal business and the new business Answer is not complete. Per Unit Amounts Total Normal New Normal New Combined Volume Eluninen Volume Business 6.00 5.20 $ 2.400,000 250,000s 2,660.000 s 1.20 Sales Variable costs: Direct materials Direct labor Variable overhead Find overhead Contribution margin Contribution margin 1.44 0.36 0.60 2403 480 OOOOO 0.36 0.60 225 OOO 576.000 144.000 240.000 900.000 1.920,000 480.000 64.000 18.270 30,000 112 270 224,540 35,460 640,000 162,270 270.000 1,072,270 2.144 540 515,450 4.49 Food costs Fixed overhead Administrative expenses Seling expenses 30,000 100 000 150.000 DOO OOOOO 00.000 5,000 105,000 150.000 0 5,000 335,000 142.730 3 5 1 252.730 Total forced costs Operating income 330,000 5 1.110.000 IS

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions

Question

Explain the goal of behavior therapy.

Answered: 1 week ago