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 $3.40 The cost of each

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Rutkey Collectibles is a small toy company that manufactures and sells metal replicas of classic cars. Each car sells for $3.40 The cost of each unit follows: Materials Labor Variable overhead Fixed overhead (522,100 per month, 22,100 units per month) Total costs per unit $1.10 0.30 8.50 1.00 $2.90 One of Rutkey's regular customers asked the company to fill a special order of 300 units at a selling price of $2.40 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 $2.90 cost per unit and has asked for your advice. Required: a. Prepare a schedule to show the impact of providing the special order of 300 units on Rutkey's profits in addition to the regular production and sales of 22,100 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? Required A Required B Required Prepare a schedule to show the impact of providing the special order of 300 units on Rutkey's profits in addition to the regular production and sales of 22,100 units per month. (Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) Status Quo Alternative 22,100 Cars 22,400 Cars Difference Sales revenue Less variable costs: Materials Labor Variable overhead Total variable cost Contribution margin Less: Fixed costs Operating profit Required A Required B Required 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 If Rutkey Collectibles company was operating at capacity, what would happen to operating profit if the special order was accepted? Increase O Decrease No change

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 Business Reporting For Decision Making

Authors: Jacqueline Birt, Keryn Chalmers, Suzanne Maloney, Albie Brooks, Judy Oliver, David Bond

7th Edition

0730369323, 9780730369325

More Books

Students also viewed these Accounting questions

Question

Under what circumstances are pay differentials justified?

Answered: 1 week ago