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The following are Qulieute Corporation's unit cost of manufacturing and marketing a high-style pen at an output level of 20,000 units per month Cost Per

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The following are Qulieute Corporation's unit cost of manufacturing and marketing a high-style pen at an output level of 20,000 units per month Cost Per und Direct materials $1.00 Direct labor 1.20 Variable manufacturing overhead 0.80 Fixed manufacturing overhead 0.50 Variable selling expense 1.50 Fixed selling expense 0.90 Total average cost per unit $5.00 The following situations are al based on the preceding data. The situations, however, are not connected. Unless you are told otherwise, please consider each situation independently. Assume that a pen regularly sells for $6. a) Quileute has 10,000 pens in inventory. What unit cost should they use to value their inventory for balance sheet purposes? What is the total value of the inventory? b) The penis usually produced and sold at the rate of 240,000 units per year (an average of 20,000 per month). The selling price is $6 per unit, which is total revenue of 51.440,000 per year. Total costs are $1,416,000, and operating income is $24,000, or $0.10 per unit, Market research estimates that unit sales could be increased by 10% il prices were out to $5.80. Assuming the implied cost behavior patterns continue, what effect would this have on operating income? c) A contract with the government for 5.000 pers calls for reimbursement to Quileute of all manufacturing costs plus a feed fee of $1,000, No variable marketing costs are incurred on the government contract. In the particular month when this contract would take place, the following two alternatives are available to Quileute. Which alternative would you prefer? Alternative Alternative Regular customers 15.000 pens 15.000 pens Government -0- 5.000 pers How will your answer change it under Alternative A, you would sel 20,000 pens to regular customers (instead of 15,00017 d) Quileute wants to enter a foreign market where price competition is keen Quileute seeks a one-time-only special order for 10,000 pens on a minimum unit-price basis. I expects that shipping costs for this order will be only $0.75 per unit, but the fixed costs of obtaining the contract will be $4.000. The company incurs no variable marketing costs other than the mentioned shipping costs. Domestic business will not be affected What is the break even selling price for this order? e) Quileute received a personal proposal from an outside supplier. Clearwater sales Clearwater will make pens and ship them directly to Quileute's customers as sales orders are forward to them from Quileute's sales staff. Quileute's fued marketing costs will be unaffected, but its variable marketing costs will be slashed by d) Quileute wants to enter a foreign market where price competition is keen. Quileute seeks a one-time-only special order for 10,000 pens on a minimum-unit-price basis. It expects that shipping costs for this order will be only $0.75 per unit, but the fixed costs of obtaining the contract will be $4,000. The company incurs no variable marketing costs other than the mentioned shipping costs. Domestic business will not be affected. What is the break-even selling price for this order? e) Quileute received a personal proposal from an outside supplier, Clearwater sales. Clearwater will make pens and ship them directly to Quileute's customers as sales orders are forward to them from Quileute's sales staff. Quileute's fixed marketing costs will be unaffected, but its variable marketing costs will be slashed by 20%. Quileute's plant where the pens are made will be idle, but its fixed manufacturing overhead can be reduced by 50%. How much would Quileute pay Clearwater for the pens without decreasing net income? The following are Qulieute Corporation's unit cost of manufacturing and marketing a high-style pen at an output level of 20,000 units per month Cost Per und Direct materials $1.00 Direct labor 1.20 Variable manufacturing overhead 0.80 Fixed manufacturing overhead 0.50 Variable selling expense 1.50 Fixed selling expense 0.90 Total average cost per unit $5.00 The following situations are al based on the preceding data. The situations, however, are not connected. Unless you are told otherwise, please consider each situation independently. Assume that a pen regularly sells for $6. a) Quileute has 10,000 pens in inventory. What unit cost should they use to value their inventory for balance sheet purposes? What is the total value of the inventory? b) The penis usually produced and sold at the rate of 240,000 units per year (an average of 20,000 per month). The selling price is $6 per unit, which is total revenue of 51.440,000 per year. Total costs are $1,416,000, and operating income is $24,000, or $0.10 per unit, Market research estimates that unit sales could be increased by 10% il prices were out to $5.80. Assuming the implied cost behavior patterns continue, what effect would this have on operating income? c) A contract with the government for 5.000 pers calls for reimbursement to Quileute of all manufacturing costs plus a feed fee of $1,000, No variable marketing costs are incurred on the government contract. In the particular month when this contract would take place, the following two alternatives are available to Quileute. Which alternative would you prefer? Alternative Alternative Regular customers 15.000 pens 15.000 pens Government -0- 5.000 pers How will your answer change it under Alternative A, you would sel 20,000 pens to regular customers (instead of 15,00017 d) Quileute wants to enter a foreign market where price competition is keen Quileute seeks a one-time-only special order for 10,000 pens on a minimum unit-price basis. I expects that shipping costs for this order will be only $0.75 per unit, but the fixed costs of obtaining the contract will be $4.000. The company incurs no variable marketing costs other than the mentioned shipping costs. Domestic business will not be affected What is the break even selling price for this order? e) Quileute received a personal proposal from an outside supplier. Clearwater sales Clearwater will make pens and ship them directly to Quileute's customers as sales orders are forward to them from Quileute's sales staff. Quileute's fued marketing costs will be unaffected, but its variable marketing costs will be slashed by d) Quileute wants to enter a foreign market where price competition is keen. Quileute seeks a one-time-only special order for 10,000 pens on a minimum-unit-price basis. It expects that shipping costs for this order will be only $0.75 per unit, but the fixed costs of obtaining the contract will be $4,000. The company incurs no variable marketing costs other than the mentioned shipping costs. Domestic business will not be affected. What is the break-even selling price for this order? e) Quileute received a personal proposal from an outside supplier, Clearwater sales. Clearwater will make pens and ship them directly to Quileute's customers as sales orders are forward to them from Quileute's sales staff. Quileute's fixed marketing costs will be unaffected, but its variable marketing costs will be slashed by 20%. Quileute's plant where the pens are made will be idle, but its fixed manufacturing overhead can be reduced by 50%. How much would Quileute pay Clearwater for the pens without decreasing net income

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