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Question 2 Assume University Athletic Booster Club sells T-shirts for $20 and anticipates selling 5,000 shirts during football season. The club purchases the shirts from
Question 2 Assume University Athletic Booster Club sells T-shirts for $20 and anticipates selling 5,000 shirts during football season. The club purchases the shirts from a local dealer for $14.50. Budgeted fixed cost of $18,000 is made up of $2,000 of selling expense and the remainder is $16,000 administrative expense. The selling expenses include a sales commission of $0.05 per shirt. All other costs are fixed. Prepare an income statement in the contribution format. University Athletic Booster Club Income Statement Question 5 Wildhorse 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 40,710 timers, the company has calculated the following unit costs. Direct fixed costs include supervisory and clerical salaries and equipment depreciation. $13 Direct materials Direct labor Variable manufacturing overhead Direct fixed manufacturing overhead 9 (30% salaries, 70% depreciation) Allocated fixed manufacturing overhead Total unit cost $36 Clifton Clocks has offered to provide the timer units to Wildhorse at a price of $34 per unit. If Wildhorse accepts the offer, the current timer unit supervisory and clerical staff will be laid off. Calculate the total relevant cost to make or buy the timer units. (Round answers to 0 decimal places, e.g. 5,250.) Make Buy Total relevant cost $ 964827 + 1384140 Assuming that Wildhorse Water has no other use for either the facilities or the equipment currently used to manufacture the timer units, should the company accept Clifton's offer? No
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