Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Special Order Tobitzu TV produces wall mounts for flat panel television sets. The forecasted income statement for 2009 is as follows: TOBITZU TV Budgeted Income

Special Order Tobitzu TV produces wall mounts for flat panel television sets. The forecasted income statement for 2009 is as follows:

TOBITZU TV Budgeted Income Statement For the Year 2009
Sales ($43 per unit) $4,300,000
Cost of good sold ($32 per unit) (3,200,000)
Gross profit 1,100,000
Selling expenses ($2 per unit) (200,000)
Net income $900,000

Additional Information (1) Of the production costs and selling expenses, $600,000 and $100,000, respectively, are fixed. (2) Tobitzu TV received a special order from a hospital supply company offering to buy 15,500 wall mounts for $28. If it accepts the order, there will be no additional fixed selling expenses, and there is currently sufficient excess capacity to fill the order. The company's sales manager argues for rejecting the order because "we are not in the business of paying $32 to make a product to sell for $28." Do you think the company should accept the special order?

Compute the contribution per unit and total contribution for the special order.

Contribution per unit. Note: Round answer to two decimal places. $Answer

Total contribution $Answer

PreviousSave AnswersFinish attempt ...

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Fundamental accounting principle

Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta

21st edition

1259119831, 9781259311703, 978-1259119835, 1259311708, 978-0078025587

Students also viewed these Accounting questions

Question

Are summer stipends available?

Answered: 1 week ago