Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The Award One Company manufactures windows. Its manufacturing plant has the capacity to produce 6,000 windows each month. Current production and sales are 5,000
The Award One Company manufactures windows. Its manufacturing plant has the capacity to produce 6,000 windows each month. Current production and sales are 5,000 windows per month. The company normally charges $200 per window. Cost information for the current activity level is as follows: (Click the icon to view the cost information.) Required (Click the icon to view the special order information.) Requirement 1. Should Award One accept this special order? Show your calculations. Begin by completing an analysis and start by showing the computation of the company's operating income without the special order. Next calculate operating income with the special order, and then calculate the differences between the two columns. (Complete all answer boxes. For amounts with no change, make sure to enter "O" in the appropriate cells of the Difference column.) Revenues Variable costs: Direct materials Direct manufacturing labour Without One-Time Only Special Order 5,000 Windows 6 Cost information Variable costs that vary with number of units produced Direct materials Direct manufacturing labour Variable costs (for setups, materials handling, quality control, and so on) that vary with number of batches, 200 batches x $1,000 per batch Fixed manufacturing costs Fixed marketing costs Total costs Print Done 150,000 75,000 - in- 200,000 er 75,000 ne 25,000 525,000 Special order information Award One has just received a special one-time-only order for 1,000 windows at $175 per window. Accepting the special order would not affect the company's regular business or its fixed costs. Award One makes windows for its existing customers in batch sizes of 25 windows (200 batches x 25 windows per batch = 5,000 windows). The special order requires Award One to make the windows in 10 batches of 100 windows. Print Done Revenues Variable costs: Direct materials Direct manufacturing labour Batch manufacturing costs Fixed costs: Fixed manufacturing costs Fixed marketing costs Total costs Operating income Special Order 5,000 Windows
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started