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Show all work. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx JL Company manufactures and sells a single product called a Widget Operating at capacity, the company can produce and sell
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JL Company manufactures and sells a single product called a Widget Operating at capacity, the company can produce and sell 30,000 Rets per year. Costs associated with thislevel of producti on and sales are given below: Unit Total Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense $25$750,000 180,000 90,000 210,000 120,000 180,000 3 7 4 Total cost $51 $ 1,530,000 The Rets normally sell for $56 each. Fixed manufacturing overhead is constant at $210,000 per y ear within the range of 21,000 through 30,000 Rets per year Required 1. Assume that due to a recession, JL Company expects to sell only 21,000 Rets through regular channels next year. A large retail chain has offered to purchase 9,000 Rets if JL is willing to accept a 16% discount off the regular price. There would be no sales commissions on this order; thus, variable selling expenses would be slashed by 75%. However, JL Company would have to purchase a special machine to engrave the retail chain's name on the 9,000 units. This machine would cost $18,000. JL Company has no assurance that the retail chain will purch ase addition al units in the future. Determin e the impact on profits next year if this special order is accepted Net profi by 2. Refer to the original data. Assume again that JL Company expects to sell only 21,000 Rets through regular channels next year. The U.S. Army would like to make a one-time-only purchase of 9,000 Rets. The Army would pay a fixed fee of $1.80 per Widget, and it would reimburse JL Comp any for all costs of production (variable and fixed) associated with the units Because the army would pick up the Rets with its own trucks, there would be no variable selling expenses associated with this order. If JL Company accepts the order, by how much will profits increase or decrease for the year? Net profit by 3. Assume the same situation as that described in (2) above, except that the company expects to sell 30,000 Rets through regular channels next y ear. Thus, accepting the U.S. Army's order would require giving up regular sales of 9,000 Rets. If the Army's order is accepted, by how much will profits increase or decrease from what they would be if the 9,000 Rets were sold through regular channels? Net profi by
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