Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Saved Calla Company produces skateboards that sell for $57 per unit. The company currently has the capacity to produce 95,000 skateboards per year, but is

image text in transcribed
image text in transcribed
image text in transcribed
Saved Calla Company produces skateboards that sell for $57 per unit. The company currently has the capacity to produce 95,000 skateboards per year, but is selling 81,900 skateboards per year. Annual costs for 81,900 skateboards follow. Direct materials Direct labor Overhead Selling expenses Administrative expenses Total costs and expenses $ 925, 470 737,100 948,000 548,000 471,000 $3,629,570 A new retail store has offered to buy 13,100 of its skateboards for $52 per unit. The store is in a different market from Calla's regula customers and would not affect regular sales. A study of its costs in antication of this additional business reveals the following: Direct materials and direct labor are 100% variable. . 40 percent of overhead is fixed at any production level from 81,900 units to 95,000 units; the remaining 60% of annual overheaa costs are variable with respect to volume, Selling expenses are 70% variable with respect to number of units sold, and the other 30% of seling expenses are fixed. There will be an additional $1.20 per unit selling expense for this order, Administrative expenses would increase by a $850 fixed amount. . Required: 1. Prepare a three-column comparative income statement that reports the following: a. Annual income without the special order. b. Annual income from the special order c. Combined annual income from normal business and the new business. 2. Should Calla accept this order? Complete this question by entering your answers in the tabs below. yuugo M McGraw-Hill Cc ew Saved Required 1 VERYTYWY Required 2 Prepare a three-column comparative income statement that reports the following: a. Annual income without the special order. b. Annual income from the special order. C. Combined annual income from normal business and the new business. (Do not round your intermediate calculation your cost and expenses to nearest whole number.) Show CALLA COMPANY COMPARATIVE INCOME STATEMENTS Normal Volume Additional Volume Combined Total Costs and expenses: Total costs and expenses Operating income 0 Required 1 Required 2 > 1. Prepare a three-column comparative income statement that reports the following: a. Annual income without the special order. b. Annual income from the special order. c. Combined annual income from normal business and the new business. 2. Should Calla accept this order? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Should Calla accept this order? Should Calla accept this order?

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

Managing Finance A Socially Responsible Approach

Authors: D. Crowther

1st Edition

0750661011, 978-0750661010

More Books

Students also viewed these Finance questions