Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Texas Controls Inc. began operations in 20X1 to manufacture a single product. There are no ending work-in-process inventories. Relevant data for the year follow: OPERATING

Texas Controls Inc. began operations in 20X1 to manufacture a single product. There are no ending work-in-process inventories. Relevant data for the year follow:

OPERATING DATA FOR 20X1
Quantities:
Beginning inventories, finished goods 0
Units produced during the year 5,850
Units sold during the year 5,300
Costs:
Direct materials ($27 per unit) $ 157,950
Direct labor ($25 per unit) 146,250
Variable factory overhead ($13 per unit) 76,050
Fixed factory overhead 59,000
Variable selling and administrative expenses ($12 per unit) 63,600
Fixed selling and administrative expenses 78,000
Selling price for each unit 112

Required:

Prepare an income statement for 20X1 using direct costing.

2a. Assume that the company has an opportunity to sell 550 units of the product in a foreign country for $85 per unit. No fixed or variable selling and administrative expenses would be incurred in connection with these units except shipping costs of $11 per unit and miscellaneous administrative expenses of $2 per unit. The company has idle capacity, and the order would not affect present markets. Compute marginal income or loss on order.

2b. Would it be profitable for the company to accept the order?

Analyze: What percentage of the foreign sales order would be realized as marginal income?

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

Students also viewed these Accounting questions