Answered step by step
Verified Expert Solution
Question
1 Approved Answer
provide me the correct answer or else i will downgrade you. Ovation Compary has a single peoduct called o Bit. The compiny normally produces and
provide me the correct answer or else i will downgrade you.
Ovation Compary has a single peoduct called o Bit. The compiny normally produces and sels 50.400 Bits each year at a selling price of $41 per unit. The company's unit costs at this level of activity are given below: A number of questions relating to the production and sale of Bits follow. Each question is independent. Required: 1. Assume that Ovation Company nas suticient capacity to produce 75,600 Bits each year without any increase in fixed mah ifacturing ovechead costs. The company could increase its sales by 25% above the curfent 50,400 unils each year if it were whing to increase the foxed selling expenses by $87000. o. Calculate the incremental net operating income. b. Would the increased fored seling expenses be justaied? 2. Assume again that Ovation Company has sufficient capacity to produce 75,600 Bits each year. A customer in a forelgn market wants to purchase 12,600 Bits. Import duties on the Bits would be $170 per unit, and costs for permits and licences would be $5,670. Both import duties ahd permits and licenses will be paid by Ovation. The only selling costs that would be assochated with the order are $3,30 per unit shipping cost. Compute the per unit break-even price on this ordec (Do not round your intermediate calculations. Round your onswer to 2 decimal ploces.) 3. The company has 1,000 Bits on hand that have some irregularities and are therefore considered to be "seconds:" Due to the. irregularities, it will be impossible to sell these units at the normat price through regular distilbution channels. What unit cost figure is relevant for setting a minimum seling price? (Round your answer to 2 decimol pinces.) 4. Due to a strike in its suppliers plant, Ovation Company is unable to purchase more material for the production or Bits, ther strike is expected to last for two months: Ovation Company has enough material on hand to operate ot 30om of normaf foves for the two month period. As an alternative, Ovation couid close its plant down entiely for the mo months. If the plant were closed, fised imanuficturina overtiead costs would continue at 6016 of their nomal fevel during the two month period and the fixed selling expenses would be reduced by 20%. What would be the impact on profits of closing the plant for the two-month period? (input the amount as a positive volue. Do not round your intermediote calculations.) 4. Due to a strike in its supplier's plant, Ovation Company is unable to purchase more materlal for the production of Bits. The strike is expected to last for two months. Ovation Company has enough materlal on hand to operate at 3095 of nomal levels for the two-mionth period. As an alternative, Ovation could close its plant down entirely for the two months. If the plant were closed, flsed manulacturing overhead costs would continue at 60% of their normal level during the two-month period and the fixed selling expenses would be. reduced by 20%. What would be the impact on profits of closing the plant for the two-month period? (lnput the amount as a positive volue. Do not round your intermediote colculotions.) 5. An outside manufacturer has offered to produce Bits and ship them directly to Ovation's customers if Ovation Campany accepts this offec, the facilities that it uses to produce Bits would be idle; however, fixed manufacturing overtiead costs would be reduced thy 75\%. Since the outside manufacturer would pay for all shipping costs, the variable selling expenses would be only two ihirds of Ihe curtent amount. Compute the unit cost that is relevant for comparison to the pice quoted by the outside manufactuien (Do not round your intermediote colculotions. Round your onswer to 2 decimal places.) Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started