Submin Check my work Exercise 11-4 (Algo) Special Order Decision [LO11-4] Imperial Jewelers manufactures and sells a gold bracelet for $405.00. The company's accounting system says that the unit product cost for this bracelet is $275.00 as shown below: Direct materials Direct labor Manufacturing overhead Unit product cost $147 88 40 $275 The members of a wedding party have approached Imperial Jewelers about buying 13 of these gold bracelets for the discounted price of $365.00 each. The members of the wedding party would like special filigree applied to the bracelets that would increase the direct materials cost per bracelet by $8. Imperial Jewelers would also have to buy a special tool for $450 to apply the filigree to the bracelets. The special tool would have no other use once the special order is completed. To analyze this special order opportunity, Imperial Jewelers has determined that most of its manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period. However, $9.00 of the overhead is variable with respect to the number of bracelets produced. The company also believes that accepting this order would have no effect on its ability to produce and sell jewelry to other customers. Furthermore, the company could fulfill the wedding party's order using its existing manufacturing capacity. Required: 1. What is the financial advantage (disadvantage) of accepting the special order from the wedding party? 2. Should the company accept the special order? Check my work Exercise 11-9 (Algo) Special Order Decision [LO11-4] Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 88,800 units per year is: Direct materials k Direct labor ces Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expense Fixed selling and administrative expense $1.60 $ 3.00 $ 0.80 $3.55 $ 1.20 $ 2.00 The normal selling price is $22.00 per unit. The company's capacity is 110,400 units per year. An order has been received from a mail- order house for 1,800 units at a special price of $19.00 per unit. This order would not affect regular sales or the company's total fixed costs. Required: 1. What is the financial advantage (disadvantage) of accepting the special order? 2. As a separate matter from the special order, assume the company's inventory includes 1,000 units of this product that were produced last year and that are inferior to the current model. The units must be sold through regular channels at reduced prices. The company does not expect the selling of these inferior units to have any affect on the sales of its current model. What unit cost is relevant for establishing a minimum selling price for the inferior units? Complete this question by entering your answers in the tabs below. Prav 7 of 11 Next 3 Exercise 11-6 (Algo) Managing a Constrained Resource [LO11-6] Check my work Portsmouth Company makes upholstered furniture. Its only variable cost is direct materials. The demand for the company's products far exceeds its manufacturing capacity. The bottleneck (or constraint) in the production process is upholstery labor-hours. Information concerning three of Portsmouth's products appears below: Selling price per unit k Variable cost per unit Recliner $1,192 $ 800 Sofa Love Seat $1,950 $1,250 $ 1,570 $ 1,150 Upholstery labor-hours per unit 7 hours 14 hours 6 hours 2 Required: aces 1. Portsmouth is considering paying its upholstery laborers hourly compensation, in addition to their usual salaries, to work overtime. Assuming that this extra time would be used to produce sofas, up to how much of an overtime rate per hour should the company be willing to pay to keep the upholstery shop open after normal working hours? 2. A small nearby upholstering company has offered to upholster furniture for Portsmouth at a price of $47 per hour. The management of Portsmouth is confident that this upholstering company's work is high quality and their craftsmen can work as quickly as Portsmouth's own craftsmen on the simpler upholstering jobs such as the Love Seat. How much additional contribution margin per hour can Portsmouth earn if it hires the nearby upholstering company to make Love Seats? 3. Should Portsmouth hire the nearby upholstering company? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Exercise 11-12 (Algo) Volume Trade-Off Decisions [LO11-5] Benoit Company produces three products-A, B, and C. Data concerning the three products follow (per unit): Selling price Variable expenses: Direct materials- Other variable expenses Total variable expenses Contribution margin Contribution margin ratio Product $ 88.00 $58.00 $ 80.00 26.40 26.40 52.80 12.00 34.40 46.40 12.00 44.00 56.00 $35.20 $11.60 $ 24.00 40% 20% 30% Check my work The company estimates that it can sell 800 units of each product per month. The same raw material is used in each product. The material costs $3 per pound with a maximum of 5,400 pounds available each month. Required: 1. Calculate the contribution margin per pound of the constraining resource for each product. 2. Which orders would you advise the company to accept first, those for A, B, or C? Which orders second? Third? 3. What is the maximum contribution margin that the company can earn per month if it makes optimal use of its 5,400 pounds of materials? Complete this question by entering your answers in the tabs below. Help Save S C The company estimates that it can sell 800 units of each product per month. The same raw material is used in each product. Th material costs $3 per pound with a maximum of 5,400 pounds available each month. Required: 1. Calculate the contribution margin per pound of the constraining resource for each product. 2. Which orders would you advise the company to accept first, those for A, B, or C? Which orders second? Third? 3. What is the maximum contribution margin that the company can earn per month if it makes optimal use of its 5,400 pounds materials? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Jy Calculate the contribution margin per pound of the constraining resource for each product. (Round your answers to 2 decimal places.) Contribution margin per pound of the constraining resource Product A Product B Product C Required 2 > Check my wo , Exercise 11-7 (Algo) Sell or Process Further Decisions [LO11-7] Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $300,000 per quarter. For financial reporting purposes, the company allocates these costs to the joint products on the basis of their relative sales value at the split-off point. Unit selling prices and total output at the split-off point are as follows: Selling Price $ 10.00 per pound Product A B c $ 16.00 per gallon $4.00 per pound Quarterly Output 11,000 pounds 17,300 pounds 2,200 gallons Each product can be processed further after the split-off point. Additional processing requires no special facilities. The additional processing costs (per quarter) and unit selling prices after further processing are given below. Product Additional Processing Costs: A $ 48,250 B $ 68,055 C $ 23,780 Required: Selling Price $ 14.10 per pound $ 9.10 per pound $23.10 per gallon 1. What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point? 2. Based on your analysis in requirement 1, which product or products should be sold at the split-off point and which product or products should be processed further? pter 11 Homework 1 Sied Help Save & Exit Sula Check my wo Dokt ences Exercise 11-13 (Algo) Sell or Process Further Decision [LO11-7] Wexpro, Incorporated, produces several products from processing 1 ton of clypton, a rare mineral. Material and processing costs total $69,000 per ton, one-fourth of which is allocated to product X15. Seven thousand five hundred units of product X15 are produced from each ton of clypton. The units can either be sold at the split-off point for $12 each, or processed further at a total cost of $9,200 and then sold for $18 each. Required: 1. What is the financial advantage (disadvantage) of further processing product X15? 2. Should product X15 be processed further or sold at the split-off point? 1. Financial advantage 2 Product X15 should be Processed further