Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Rutkey Collectibles is a small toy company that manufactures and sells metal replicas of classic cars. Each car sells for $3.25 The cost of

image text in transcribed

Rutkey Collectibles is a small toy company that manufactures and sells metal replicas of classic cars. Each car sells for $3.25 The cost of each unit follows: Materials Labor Variable overhead $0.90 0.80 0.30 Fixed overhead ($13,275 per month, 17,700 units per month) 0.75 Total costs per unit $2.75 One of Rutkey's regular customers asked the company to fill a special order of 600 units at a selling price of $2.50 per unit. Rutkey's can fill the order using existing capacity without affecting total fixed costs for the month. However, Rutkey's manager was concerned about selling at a price below the $2.75 cost per unit and has asked for your advice. Required: a. Prepare a schedule to show the impact of providing the special order of 600 units on Rutkey's profits in addition to the regular production and sales of 17,700 units per month. b. Based solely on the data given, what is the lowest price per unit at which the model cars could be sold for the special order without reducing Rutkey's profits? c. If Rutkey Collectibles company was operating at capacity, what would happen to operating profit if the special order was accepted?

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

Accounting Information Systems

Authors: Marshall B. Romney, Paul J. Steinbart

13th edition

133428532, 978-0133428537

More Books

Students also viewed these Accounting questions