Rosa Company produced 1,000 defective phones due to a production error. The phones had cost $60,000 to produce. A salvage company will buy the defective phones as scrap for $30,000. It would cost Rosa $80,000 to rework the phones. If the phones are reworked, Rosa could sell them for $120,000. (a) Prepare a scrap or rework analysis of income effects. (b) Should Rosa scrap or rework the phones? (a) Scrap or Rework Analysis Scrap Rework Revenue from scrapped/reworked units Cost of reworked units Income (b) The company should: Help Save & Surf Company can sell all of the two surfboard models it produces, but it has only 400 direct labor hours available. The Glide model requires 2 direct labor hours per unit. The Ultra model requires 4 direct labor hours per unit. Contribution margin per unit is $200 for Glide and $300 for Ultra. (a) Compute the contribution margin per direct labor hour for each product. (b) Determine the best sales mix and the resulting contribution margin. Complete this question by entering your answers in the tabs below. Required A Required B Compute the contribution margin per direct labor hour for each product. Glide Ultra Contribution margin per direct labor hour Saved Help Save Surf Company can sell all of the two surfboard models it produces, but it has only 400 direct labor hours available. The Glide model requires 2 direct labor hours per unit. The Ultra model requires 4 direct labor hours per unit. Contribution margin per unit is $200 for Glide and $300 for Ultra. (a) Compute the contribution margin per direct labor hour for each product. (b) Determine the best sales mix and the resulting contribution margin. Complete this question by entering your answers in the tabs below. Required A Required B Determine the best sales mix and the resulting contribution margin. Number of units Contribution margin Glide Ultra < Required A Required B A segment of a company reports the following loss for the year. All $140,000 of its variable costs are avoidable, and $75,000 of its fixed costs are avoidable. Segment Income (Loss) Sales Variable costs Contribution margin Fixed costs Income (loss) $ 200,000 140,000 60,000 80,000 (20,000) =) Compute the income increase or decrease from eliminating this segment. >) Should the segment be eliminated? Complete this question by entering your answers in the tabs below. Required A Required B compute the income increase or decrease from eliminating this segment. egment Elimination Analysis Continue Eliminate es $ 200,000 Income Increase (Decrease) -- - --- 140 00 Complete this question by entering your answers In the tabs below. Required A Required B Compute the income increase or decrease from eliminating this segment. Segment Elimination Analysis Income Increase (Decrease) Sales Variable costs Contribution margin Fixed costs Income (loss) Continue Eliminate $ 200,000 140,000 60,000 80,000 $ (20,000) Required A Required B > Complete this question by entering your answers in the tabs below. Required A Required B Should the segment be eliminated? Should the segment be eliminated? Radar Company sells bikes for $300 each. The company currently sells 3,750 bikes per year and could make as many as 5,000 bikes per year. The bikes cost $225 each to make: $150 in variable costs per bike and $75 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 750 bikes for $250 each. Incremental fixed costs to make this order are $60 per bike. No other costs will change if this order is accepted. (a) Compute the income for the special offer. (b) Should Radar accept this offer? (a) Special offer analysis Per Unit Total Sales Contribution margin Income (b) The company should $ 0 Hip Manufacturing produces denim clothing. This year it produced 3,100 denim jackets at a cost of $93,000. These jackets were damaged in the warehouse during storage. Management identified three alternatives for these jackets. 1. Jackets can be sold as scrap to a secondhand clothing shop for $18,600. 2. Jackets can be disassembled at a cost of $6,200 and sold to a recycler for $37,200. 3. Jackets can be reworked and turned into good jackets. The cost of reworking the jackets will be $105,400, and the jackets can then be sold for $139,500. Required: (1) Compute the income for each alternative. (2) Which alternative should be chosen? Scrap, Recycle or Rework Analysis Revenue from scrap/recycle/rework Cost of recycled/reworked units Scrap Recycle Rework Income $ 0 $ 0 0 FURY produces and sells skateboards. Its contribution margin income statement follows. Contribution Margin Income Statement For Year Ended December 31 Sales (83,000 units) Variable costs Direct materials Direct labor Variable overhead Contribution margin Fixed costs Fixed overhead Fixed general and administrative Income Per Unit $ 53.00 Annual Total $ 4,399,000 23.00 9.00 1,909,000 747,000 11.00 913,000 10.00 830,000 3.00 2.00 249,000 166,000 $ 5.00 $ 415,000 A potential customer offers to buy 10,300 units for $45.00 each. These sales would not affect the company's sales through its normal channels. Details of the special offer follow. Variable costs per unit would not change. Accepting the offer would require incremental fixed overhead costs of $10,300. Accepting the offer would require incremental fixed general and administrative costs of $15,450. Required: 1. Compute income or loss from the special offer. 2. Should the company accept or reject the special offer? Required 1 Required 2 Compute income or loss from the special offer. (Round your "Per Unit" answers to 2 decimal places.) Special Offer Analysis Per Unit Total Contribution margin 0.00 0 Income (loss) $ 0.00 $ 0 Required T Required 2 > Complete this question by entering your answers In the tabs below. Required 1 Required 2 Should the company accept or reject the special offer? Should the company accept or reject the special offer? < Required 1 Required 2