Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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 (GGl) 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. GGl's operating capacity is 22,000 one-hundred-pound bags per month, and it currently is selling 20,000 bags manufactured in 20 batches of 1,000 bags each. The firm just received a request for a special order of 5,000 one-hundred-pound bags of fertilizer for $130,000 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 $2,500 cost for GGI. The special order would be processed in two batches of 2,500 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 GGl's current operations: 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 GG fill the entire order of 5,000 bags. Assume that the $12.00 fixed manufacturing overhead cost per unit consists of facility-level costs (\$9.00/unit at the 20,000-unit output level), with the remainder being setup-related (i.e., 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. 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 (i.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, a pefore, the one-time delivery cost of $2,500. 3. If accepted, how would the special order affect GGl's short-term operating income? 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 $2,500. (Round the total cost to the nearest whole dollar amount and "perunit relevant cost" to 2 decimal places.) If accepted, how would the special order affect GGI's short-term operating income? Required information [The following information applies to the questions displayed below.] Green Grow Incorporated (GGl) 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. GGl's operating capacity is 22,000 one-hundred-pound bags per month, and it currently is selling 20,000 bags manufactured in 20 batches of 1,000 bags each. The firm just received a request for a special order of 5,000 one-hundred-pound bags of fertilizer for $130,000 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 $2,500 cost for GGI. The special order would be processed in two batches of 2,500 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 GGl's current operations: 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 GG fill the entire order of 5,000 bags. Assume that the $12.00 fixed manufacturing overhead cost per unit consists of facility-level costs (\$9.00/unit at the 20,000-unit output level), with the remainder being setup-related (i.e., 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. 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 (i.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, a pefore, the one-time delivery cost of $2,500. 3. If accepted, how would the special order affect GGl's short-term operating income? 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 $2,500. (Round the total cost to the nearest whole dollar amount and "perunit relevant cost" to 2 decimal places.) If accepted, how would the special order affect GGI's short-term operating income

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored 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

Auditing A Quickstudy Reference Tool

Authors: Michael P Griffin

1st Edition

1423236408, 978-1423236405

More Books

Students also viewed these Accounting questions

Question

3. Is it a topic that your audience will find worthwhile?

Answered: 1 week ago

Question

2. Does the topic meet the criteria specified in the assignment?

Answered: 1 week ago