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QUESTION 4 Partially correct P Flag question 3.33 points out of 20.00 Special Order Total cost data follow for Greenfield Manufacturing Company, which has a
QUESTION 4 Partially correct P Flag question 3.33 points out of 20.00 Special Order Total cost data follow for Greenfield Manufacturing Company, which has a normal capacity per period of 20,000 units of product that sell for $54 each. For the foreseeable future, regular sales volume should continue to equal normal capacity Direct material Direct labor Variable manufacturing overhead Fixed manufacturing overhead (Note 1) Selling expense (Note 2) Administrative expense (fixed) $268,800 202,000 154,000 118,800 129,600 50,000 $923,200 Notes: 1. Beyond normal capacity, fixed overhead costs increase $4,500 for each 1,000 units or fraction thereof until a maximum capacity of 24,000 units is reached 2. Selling expenses consist of a 10% sales commission and shipping costs of $1 per unit. Greenfield pays only one-half of the regular sales commission rates on sales amounting to $3,000 or more Greenfield's sales manager has received a special order for 2,500 units from a large discount chain at a price of $44 each, F.O.B. factory. The controller's office has furnished the following additional cost data related to the special order: 1. Changes in the product's design will reduce direct material costs by $4 per unit. 2. Special processing will add 10% to the per-unit direct labor costs 3. Variable overhead will continue at the same proportion of direct labor costs 4. Other costs should not be affected a. Present an analysis supporting a decision to accept or reject the special order. (Round computations to the nearest cent.)
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