Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The following are the selling price variable costs, and contribution margin for one unit of each of Banner Company's three products: B. and C: Product

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
The following are the selling price variable costs, and contribution margin for one unit of each of Banner Company's three products: B. and C: Product $150.00 $150.00 $130.00 Selling price Variable costs Direct materials Direct labour Variable manufacturing overhead Total variable cost Contribution margin Contribution margin ratio 73.50 18.00 4.50 96.00 5.54.00 365 45.00 36.00 9.00 90.00 $ 50.00 40% 73.70 18.00 4.50 96.20 $ 3.80 26% Due to a strike in the plant of one of its competitors, demand for the company's products for exceeds its capacity to produce Management is trying to determine which product(s) to concentrate on next week in filling its backlog of orders. The direct labour rate is $9 per hout, and only 3,920 hours of labour time are available each week. Required: 1. Compute the amount of contribution margin that will be obtained per hour of labour time spent on eath product. (Round your Intermediate calculations to 1 decimal place. Round your answers to 2 decimal places.) B C Contribution margin per labour hour 2. Which orders would you recommend that the company work on next week the orders for product product B, or product C? O Product O Products O Product 3. By paying overtime wages, more than 3920 hours of direct labour time can be made available next week Up to how much should the company be willing to pay per hour in overtime wages as long as there is unfiled demand for the three products? (Do not round Intermediate calculations. Round your answer to 2 decimal places.) Maximum amount per hour Sato Awards has had a request for a special order of 10 silver plated trophies from the provincial tennis association. The normal selling price of such a trophy is $336,00 and its unit product cost is $224.00, as shown below: Direct materials Direct labour Manufacturing overhead Unit product cost $124.00 76.00 24.00 $224.00 Most of the manufacturing overhead is fixed and unaffected by variations in how many trophies are produced in any given period However, $4 of the overhead is variable, depending on the number of trophies produced. The customer would like a special logo applied to the trophies requiring additional materials costing $2 per trophy and would also require acquisition of a special tool costing $420 that would have no other use once the special order was completed. This order would have no effect on the company's regular sales and the order could be filled using the company's existing capacity without affecting any other ordet. Required: What effect would accepting this order have on the company's operating income if a special price of $291.00 is offered per trophy for this order? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Netoering come by b. Should the special order be accepted at this price? Yes O No

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_2

Step: 3

blur-text-image_3

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

Statistics For Economics Accounting And Business Studies

Authors: Michael Barrow

7th Edition

1292118709, 978-1292118703

More Books

Students also viewed these Accounting questions

Question

1. Keep a reasonable distance.

Answered: 1 week ago

Question

Describe the linkages between HRM and strategy formulation. page 80

Answered: 1 week ago