Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Right click to open the image in a new tab, it will be readable Requirement 2. Suppose plant capacity were only 11,000 windows instead of
Right click to open the image in a new tab, it will be readable
Requirement 2. Suppose plant capacity were only 11,000 windows instead of 12,000 windows each month. The special order must either be taken in full or be rejected completely. Should Score One accept the special order? Show your calculations. Complete the analysis below to determine if Score One should accept the special order under this scenario. With One-Time Only Special Order Under Reduced Plant Capacity 11,000 Windows Revenues Variable costs: Direct materials Direct manufacturing labor Batch manufacturing costs Fixed costs: Fixed manufacturing costs Fixed marketing costs Total costs Operating income Based on the calculations under this scenario, Score One should the one-time only special order under the reduced capacity because accepting the order operating income by Requirement 3. As in requirement 1, assume that monthly capacity is 12,000 windows. Score One is concerned that if it accepts the special order, its existing customers will immediately demand a price discount of $10 in the month in which the special order is being filled. They would argue that Score One's capacity costs are now being spread over more units and that existing customers should get the benefit of these lower costs. Should Score One accept the special order under these conditions? Show your calculations. Select the labels and then enter the amounts to calculate the net effect on operating income from accepting the special order under this scenario. (Use a minus sign or parentheses to show a net decrease in operating income from accepting the special order. Abbreviations used: Operating income = Ol; Special order = SO.) Net increase (decrease) in Ol from accepting So Score One should the one-time-only special order under this scenario because accepting the order operating income The Score One Company manufactures windows. Its manufacturing plant has the capacity to produce 12,000 windows each month. Current production and sales are 10,000 windows per month. The company normally charges $300 per window. Cost information for the current activity level is as follows: B (Click the icon to view the cost information.) (Click the icon to view the special order information.) Read the requirements Requirement 1. Should Score One accept this special order? Show your calculations. Begin by completing an analysis, and start by showing the computation of the company's operating income without the special order. Next, calculate operating income with the special order, and then calculate the differences between the two columns. (Complete all input fields. For amounts with no change, make sure to enter "0" in the appropriate cells of the Difference column.) Without With One-Time Only One-Time Only Data table - X Difference More info Special Order 10,000 Windows Special Order 12,000 Windows 2,000 Windows Revenues $ Variable costs: Variable costs that vary with number of units produced Direct materials Direct manufacturing labor Variable costs (for setups, materials handling, quality control, and so on) that vary with number of batches, 200 batches * $1,500 per batch Fixed manufacturing costs 600,000 450,000 Direct materials Score One has just received a special one-time-only order for 2,000 windows at $250 per window. Accepting the special order would not affect the company's regular business or its fixed costs. Score One makes windows for its existing customers in batch sizes of 50 windows (200 batches x 50 windows per batch = 10,000 windows). The special order requires Score One to make the windows in 40 batches of 50 windows. 300.000 45,000 50.000 Direct manufacturing labor Batch manufacturing costs Fixed costs: Fixed manufacturing costs Fixed marketing costs Fixed marketing costs 1,445,000 Total costs Print Done Total costs Operating income Print Done Based on the above calculations, Score One should implications because accepting the order the one-time only special order if it has no long-term operating income byStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started