Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

Required information The following information applies to the questions displayed below) Green Grow Incorporated (GG) manufactures lawn fertilizer. Because of the product's very high quality,

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Required information The following information applies to the questions displayed below) Green Grow Incorporated (GG) manufactures lawn fertilizer. Because of the product's very high quality, GGI often receives special orders from agricultural research groups. For each type of fertilizer sold, each bag is carefully filled to have the precise mix of components advertised for that type of fertilizer, GGI's operating capacity is 38,000 one hundred pound bags per month, and it currently is selling 36,000 bags manufactured in 36 batches of 1,000 bags each. The firm just received a request for a special order of 8.200 one-hundred-pound bags of fertilizer for $230,000 from APAC, a research organization. The production costs would be the same, but there would be no variable selling costs. Delivery and other packaging and distribution services would cause a one-time $5,300 cost for GGI. The special order would be processed in two batches of 4,100 bags each. (No incremental batch-level costs are anticipated. Most of the batch-level costs in this case are short-term fixed costs, such as salaries and depreciation.) The following information is provided about GGI's current operations Sales and production cost data for 36,000 bags, per bagi Sales price Variable manufacturing costs 31 Variable selling costs Fixed manufacturing costs Fixed marketing costs 5 No marketing costs would be associated with the special order. Because the order would be used in research and consistency is critical, APAC requires that GGI fill the entire order of 8,200 bags Assume that the $10.00 fixed manufacturing overhead cost per unit consists of facility-level costs ($7.00/unit at the 36,000 unit output level), with the remainder being setup-related (.o., batch-level) costs. Assume that the setup related costs increase in total with the number of batches produced and that the facility-level fixed costs do not vary in total, with either the number of units produced or the number of batches produced during a period. $ 52 os 4 10 Required: 1. What is the total fixed manufacturing overhead cost for the period? Break down (that is, decompose) this total cost into its component parts (.e., batch-related overhead costs and facility-related fixed overhead costs) 2. Calculate the relevant unit and total costs of the special order, including the new information about batch-related costs. Assume, as before, the one-time delivery cost of $5,300. 3. If accepted, how would the special order affect GGI's short-term operating income? Complete this question by entering your answers in the tabs below. how would the special order arrect GGI's short term operating incomer nces Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the total fixed manufacturing overhead cost for the period? Break down (that is, decompose) this total cost into its component parts (L.e., batch-related overhead costs and facility-related fixed overhead costs). (Round your answers to the nearest whole dollar amount.) Total batch-related overhead costs Facility-related overhead costs Total fixed manufacturing overhead cost Required Required 2 > Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Calculate the relevant unit and total costs of the special order, including the new information about batch-related costs. Assume, as before, the one-time delivery cost of $5,300. (Round the total cost to the nearest whole dollar amount and "per- unit relevant cost" to 2 decimal places.) Total relevant cost for the special order Total relevant unit cost for the items in the special order 2. Calculate the relevant unit and total costs of the special order, including the new information about batch-related costs. Assu before, the one-time delivery cost of $5,300. 3. If accepted, how would the special order affect GGI's short-term operating income? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 If accepted, how would the special order affect GGI's short-term operating Income? Operating profit would

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Horngrens Accounting

Authors: Tracie L. Miller nobles, Brenda L. Mattison, Ella Mae Matsumura

12th edition

978-0134674681

Students also viewed these Accounting questions