Required information [The following information applies to the questions displayed below.) Intercontinental Chemical Company, located in Buenos Aires, Argentina, recently received an order for a product it does not normally produce. Since the company has excess production capacity, management is considering accepting the order. In analyzing the decision, the assistant controller is compiling the relevant costs of producing the order. Production of the special order would require 9,200 kilograms of theolite. Intercontinental does not use theolite for its regular product, but the firm has 9,200 kilograms of the chemical on hand from the days when it used theolite regularly. The theolite could be sold to a chemical wholesaler for 15,400 p. The book value of the theolite is 3.60 p per kilogram. Intercontinental could buy theolite for 4.00 p per kilogram. (p denotes the peso, Argentina's national monetary unit. Many countries use the peso as their unit of currency. On the day this exercise was written, Argentina's peso was worth .104 U.S. dollar.) Required: 1-a. What is the relevant cost of theolite for the purpose of analyzing the special-order decision? 1-b. The relevant cost of theolite for the purpose of analyzing the special-order decision is an example of Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B The relevant cost of theolite for the purpose of analyzing the special-order decision is an example of: The relevant cost of theolite for the purpose of analyzing the special-order decision is an example of Required information [The following information applies to the questions displayed below.] Intercontinental Chemical Company, located in Buenos Aires, Argentina, recently received an order for a product it does not normally produce. Since the company has excess production capacity, management is considering accepting the order. In analyzing the decision, the assistant controller is compiling the relevant costs of producing the order. Production of the special order would require 9,200 kilograms of theolite. Intercontinental does not use theolite for its regular product, but the firm has 9,200 kilograms of the chemical on hand from the days when it used theolite regularly. The theolite could be sold to a chemical wholesaler for 15,400 p. The book value of the theolite is 3.60 p per kilogram. Intercontinental could buy theolite for 4.00 p per kilogram. (p denotes the peso, Argentina's national monetary unit. Many countries use the peso as their unit of currency. On the day this exercise was written, Argentina's peso was worth 104 U.S. dollar.) 2. Identify the relevance of each of the numbers given in the exercise in making the decision. (a) Sales value (b) Book value (C) Current purchase cost Day Street Deli's owner is disturbed by the poor profit performance of his ice cream counter. He has prepared the following profit analysis for the year just ended. $45,000 20,000 $25,000 Sales Less: Cost of food Gross profit Less: Operating expenses: Wages of counter personnel Paper products (e. 8., napkins) Utilities (allocated) Depreciation of counter equipment and furnishings Depreciation of building (allocated) Deli manager's salary (allocated) Total Loss on ice cream counter $12,000 4,000 2,900 2,500 4,000 3,000 28,400 $ (3,400) Required: Correct the owner's profit analysis for the year just ended. Less: Operating expenses Total Duo Company manufactures two products, Uno and Dos. Contribution margin data follow. Uno $13.00 Dos $31.00 Unit sales Less variable cost: Direct material Direct labor Variable overhead Variable selling and administrative cost Total variable cost Unit contribution margin $ 7.00 1.00 1.25 0.75 $10.00 $ 3.00 $ 5.00 6.00 7.50 0.50 $19.00 $12.00 Duo company's production process uses highly skilled labor, which is in short supply. The same employees work on both products and earn the same wage rate. Required: 1. Calculate the contribution margin per scarce resource for each of the products assuming an arbitrary time period for which direct laborers earn $1.00 per unit. 2. Which of Duo Company's products is most profitable? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the contribution margin per scarce resource for each of the products assuming an arbitrary time period for which direct laborers earn $1.00 per unit. Uno Dos
