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Shim Amon owns a small business that manufactures and sells freezers. He manufactures one standard freezer available for sale and he also manufactures custom freezers
Shim Amon owns a small business that manufactures and sells freezers. He manufactures one standard freezer available for sale and he also manufactures custom freezers as special order for his customers. His accountant prepared the following financial information from the past year as shown below. Special Order Sales Standard Sales Total Quantity Sold 7,300 6,700 14,000 Sales $1,022,000 $904,500 $1,926,500 Material $270,100 $247,900 $518,000 Labor $335,800 $308,200 $644,000 Variable overhead $43,800 $40,200 $84,000 Fixed overhead $75,700 $56,700 $132,400 Income $296,600 $251,500 $548,100 East Co. has asked Mr. Amon to manufacture 750 special units for the showroom of the company. Mr. Amon is working at capacity. He cannot back out on special orders already agreed to, but he could reduce the output of his standard sales to make the special order. East Co. is willing to pay $141 for each unit. The material, labor and variable overhead costs per unit of the special order will be same unit costs as the standard sales. Mr. Amon will have to spend $5,250 for a special device that will only be used for this special order. Do not enter dollar signs or commas in the input boxes. Round all answers to the nearest whole number. a) What is the foregone contribution margin per unit of standard sales if they accept the special order? Regular selling price per unit Answer Material per unit Answer Labor per unit Answer Variable overhead per unit Answer Total variable costs per unit Answer Foregone CM per unit Answer b) What is the total relevant costs for each unit of the special order? Material per unit Answer Labor per unit Answer Variable overhead per unit Answer Special device (per unit) Answer Foregone CM per unit Answer Total relevant costs per unit
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