PLEASE HELP! READ BOTH QUESTIONS CAREFULLY & MAKE THE ANSWERS CLEAR
Calla Company produces skateboards that sell for $51 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 Director Overhead Selling expenses Administrative expenses Totalcoms and expenses S M2540 895300 958.000 556.000 $3.522.340 A new retail store has offered to buy 18,200 of its skateboards for $46 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% variable. * 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 variable with respect to volume. Selling expenses are 70% variable with respect to number of units sold, and the other 30% of selling expenses are fixed. There will be an additional $1.3 per unit selling expense for this order. Administrative expenses would increase by a $860 fixed amount. Required: Prepare a three-column comparative income statement that reports the following: Annual income without the special order. . Annual income from the special order. Combined annual income from normal business and the new business. (Do not round your intermediate calculation round your cost and expenses values to nearest whole decimal places.) CALLA COMPANY COMPARATIVE INCOME STATEMENTS Normal Volume Additional Combined To Costs and expenses Total costs and expenses Operating income Haver Company currently produces component RX5 for its sole product. The current cost per unit to manufacture the required 62,000 units of RX5 follows. Direct materials Direct labor Overhead $ 4.00 8.00 9.00 Total costs per unit $ 21.00 Direct materials and direct labor are 100% variable. Overhead is 80% fixed. An outside supplier has offered to supply the 62,000 units of RX5 for $19.00 per unit. Required: 1. Calculate the incremental costs of making and buying component RX5. Total incremental costs of: Making the units Buying the units Total costs Should the company continue to manufacture the part, or should it buy the part from the outside supplier