Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Rutkey Collectibles is a small toy company that manufactures and sells metal replicas of classic cars. Each car sells for $3.80 The cost of each
Rutkey Collectibles is a small toy company that manufactures and sells metal replicas of classic cars. Each car sells for $3.80 The cost of each unit follows: Materials Labor Variable overhead Fixed overhead ($26,250 per month, 21,000 units per month) Total costs per unit $1.00 0.80 0.50 1.25 $3.55 One of Rutkey's regular customers asked the company to fill a special order of 500 units at a selling price of $2.55 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 $3.55 cost per unit and has asked for your advice. Required: a. Prepare a schedule to show the impact of providing the special order of 500 units on Rutkey's profits in addition to the regular production and sales of 21,000 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? Complete this question by entering your answers in the tabs below. Required a Required B Required Prepare a schedule to show the impact of providing the special order of 500 units on Rutkey's profits in addition to the regular production and sales of 21,000 units per month. (Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) Status Quo 21,000 Cars $ 74,550 Alternative 21,500 Cars Difference Sales revenue Less variable costs: Materials Labor Variable overhead Total variable cost Contribution margin Less: Fixed costs Operating profit $ 0 $ Required A Required B Required C 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? (Enter your answer to 2 decimal places.) Lowest price per car Required A Required B Required C If Rutkey Collectibles company was operating at capacity, what would happen to operating profit if the special order was accepted? O Increase O Decrease No change
Step 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