Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The Medal One Company manufactures windows. Its manufacturing plant has the capacity to produce 11,000 windows each month. Current production and sales are 10,000 windows
The Medal One Company manufactures windows. Its manufacturing plant has the capacity to produce 11,000 windows each month. Current production and sales are 10,000 windows per month. The company normally charges $250 per window Cost Information for the current activity level is as follows: (Click the icon to view the cost information) Click the icon to view the special order information) Read the requirements Requirement 1. Should Medal 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 input fields. For amounts with no change, make sure to enter "U" in the appropriate cells of the Difference column.) Without With Data Table One-Time Only One-Time Only Special Order Special Order 10,000 Windows 11,000 Windows Variable costs that vary with number of units produced Revenues S 2.500,000 Direct materials $ 400 000 Variable costs Direct manufacturing labor 350.000 Direct materials $ 400,000 Variable costs (for setups, materials handling, quality control, and so on) that vary with number of batches, 40 batches * $800 per batch 32.000 Direct manufacturing labor 350,000 Fixed manufacturing costs 275.000 Batch manufacturing costs 32.000 Fixed marketing costs 150.000 Fixed costs Total costs $ 1207.000 Fbred manufacturing costs 275,000 Fixed marketing costs 150.000 Print Done Total costs s 1,207.000 s Operating income 1,293.000 -X More info Requirements 1. Should Medal One accept this special order? Show your calculations. 2. Suppose plant capacity were only 10.500 windows instead of 11.000 windows each month. The special order must other be taken in full or be rejected completely Should Medal One accape the pecial order? Show your callations 3. As in requirement 1.ssume that monthly capacity is 11000 windows Medal One is concerned that if it accept the special order its existing customers will immediately demand a price discount of 520 in the month in which the special order is being filled. They would argue that Medal One's capacity costs are now being spread over more units and that existing customers should get the benefit of the lower costs Should Medal One accept the special order under these conditions? Show your calculations Medal One has just received a special one-time-only order for 1.000 windows at 5200 per window. Accepting the special order would not affect the company's regular business or its fixed costs Medal One makes windows for its existing customers in batch sizes of 250 windows (40 batches 250 windows per batch = 10,000 windows). The special order requires Medal One to make the windows in 8 batches of 125 windows Print Done Done
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