Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please solve both requirements 1. The Cotton Company manufactures slippers and sells them at $13 a pair. Variable manufacturing cost is $5.25 a pair, and

image text in transcribedimage text in transcribedPlease solve both requirements

1. The Cotton Company manufactures slippers and sells them at $13 a pair. Variable manufacturing cost is $5.25 a pair, and allocated fixed manufacturing cost is $2.25 a pair. It has enough idle capacity available to accept a one-time-only special order of 35,000 pairs of slippers at $7.50 a pair. Cotton will not incur any marketing costs as a result of the special order. What would the effect on operating income be if the special order could be accepted without affecting normal sales: (a) $0, (b) $78,750 increase, (c) $183,750 increase, or (d) $262,500 increase? Show your calculations. 2. The Springfield Company manufactures Part No. 498 for use in its production line. The manufacturing cost per unit for 20,000 units of Part No. 498 is as follows: (Click to see the manufacturing cost per unit.) Read part 2's requirement 1. The Cotton Company manufactures slippers and sells them at $13 a pair. Variable manufacturing cost is $5.25 a pair, and allocated fixed manufacturing cost is $2.25 a pair. It has enough idle capacity available to accept a one-time-only special order of 35,000 pairs of slippers at $7.50 a pair. Cotton will not incur any marketing costs as a result of the special order. What would the effect on operating income be if the special order could be accepted without affecting normal sales: (a) $0, (b) $78,750 increase, (c) $183,750 increase, or (d) $262,500 increase? Show your calculations. Begin by selecting the labels to calculate the effect on operating income and then enter in the supporting calculations. Data table Requirement For Springfield to achieve an overall savings of $15,000, the amount of relevant costs that would have to be saved by using the released facilities in the The Bench Company has offered to sell 20,000 units of Part No. 498 to Springfield manufacture of Part No. 575 would be which of the following: (a) $100,000, (b) $95,000, (c) $15,000 or (d) $180,000 ? Show your calculations. What other factors for $46 per unit. Springfield will make the decision to buy the part from Bench if there is an overall savings of at least $15,000 for Springfield. If Springfield accepts Bench's offer, $5 per unit of the fixed overhead allocated would be eliminated. Furthermore, Springfield has determined that the released facilities could be used to save relevant costs in the manufacture of Part No. 575

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

The Budget Bible Budgeting Made Simple

Authors: Jessica Charise Brant, Adrienne Homet Hand

979-8218059880

More Books

Students also viewed these Accounting questions

Question

9. Understand the phenomenon of code switching and interlanguage.

Answered: 1 week ago