Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Reward One Company manufactures windows. Its manufacturing plant has the capacity to produce 12,000 windows each month. Current production and sales are 10,000 windows

image text in transcribedimage text in transcribedimage text in transcribed

The Reward One Company manufactures windows. Its manufacturing plant has the capacity to produce 12,000 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: EB (Click the icon to view the cost information.) (Click the icon to view the special order information.) - X Data Table VVItnout VItn One-Time Only One-Time Only Special Order Difference Special Order Variable costs that vary with number of units produced 10,000 Windows 12,000 Windows 2,000 Windows Direct materials $ 600,000 Revenues Direct manufacturing labor 700,000 Variable costs Variable costs (for setups, materials handling, quality control, and so on) Direct materials 150,000 that vary with number of batches, 100 batches x $1,500 per batch Direct manufacturing labor 250,000 Fixed manufacturing costs Batch manufacturing costs 400,000 Fixed marketing costs Fixed costs 2,100,000 Total costs Fixed manufacturing costs Fixed marketing costs Print Done Total costs Operating income the one-time only special order if it has no long-term Based on the above calculations, Reward One should implications because accepting the order operating income by $ ws each month. The special order must either be taken in full or be rejected completely. Should Reward One accept the X More Info der this scenario. Reward One has just received a special one-time-only order for 2,000 windows at $225 per window. Accepting the special order would not affect the company's regular business or its fixed costs. Reward One makes windows for its existing customers in batch sizes of 100 windows (100 batches x 100 windows per batch 10,000 windows). The special order requires Reward One to make the windows in 25 batches of 80 windows. ext question Requirement 2. Suppose plant capacity were only 11,000 windows instead of 12,000 windows each month. The special order must either be taken in full or be rejected completely. Should Reward One accept the special order? Show your calculations. Complete the analysis below to determine if Reward One should accept the special order under this scenario. With One-Time Only Special Order Under Reduced Plant Capacity 11,000 Windows Revenues Variable costs: Direct materials Direct manufacturing labor Batch manufacturing costs Fixed costs: Fixed manufacturing costs Fixed marketing costs Total costs Operating income Based on the calculations under this scenario, Reward One should the one-time only special order under the reduced capacity because accepting the order operating income by $ Requirement 3. As in requirement 1, assume that monthly capacity is 12,000 windows. Reward One is concerned that if it accepts the special order, its existing customers will immediately demand a price discount of $20 in the month in which the special order is being filled. They would argue that Reward One's capacity costs are now being spread over more units and that existing customers should get the benefit of these lower costs. Should Reward One accept the special order under these conditions? Show your calculations. Select the labels and then enter the amounts to calculate the net effect on operating income from accepting the special order under this scenario. (Use a minus sign or parentheses to show a net decrease in operating income from accepting the special order. Abbreviations used: Operating income Ol; Special order SO.) Net increase (decrease) in Ol from accepting SO Reward One should the one-time-only special order under this scenario because accepting the order operating income. The Reward One Company manufactures windows. Its manufacturing plant has the capacity to produce 12,000 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: EB (Click the icon to view the cost information.) (Click the icon to view the special order information.) - X Data Table VVItnout VItn One-Time Only One-Time Only Special Order Difference Special Order Variable costs that vary with number of units produced 10,000 Windows 12,000 Windows 2,000 Windows Direct materials $ 600,000 Revenues Direct manufacturing labor 700,000 Variable costs Variable costs (for setups, materials handling, quality control, and so on) Direct materials 150,000 that vary with number of batches, 100 batches x $1,500 per batch Direct manufacturing labor 250,000 Fixed manufacturing costs Batch manufacturing costs 400,000 Fixed marketing costs Fixed costs 2,100,000 Total costs Fixed manufacturing costs Fixed marketing costs Print Done Total costs Operating income the one-time only special order if it has no long-term Based on the above calculations, Reward One should implications because accepting the order operating income by $ ws each month. The special order must either be taken in full or be rejected completely. Should Reward One accept the X More Info der this scenario. Reward One has just received a special one-time-only order for 2,000 windows at $225 per window. Accepting the special order would not affect the company's regular business or its fixed costs. Reward One makes windows for its existing customers in batch sizes of 100 windows (100 batches x 100 windows per batch 10,000 windows). The special order requires Reward One to make the windows in 25 batches of 80 windows. ext question Requirement 2. Suppose plant capacity were only 11,000 windows instead of 12,000 windows each month. The special order must either be taken in full or be rejected completely. Should Reward One accept the special order? Show your calculations. Complete the analysis below to determine if Reward One should accept the special order under this scenario. With One-Time Only Special Order Under Reduced Plant Capacity 11,000 Windows Revenues Variable costs: Direct materials Direct manufacturing labor Batch manufacturing costs Fixed costs: Fixed manufacturing costs Fixed marketing costs Total costs Operating income Based on the calculations under this scenario, Reward One should the one-time only special order under the reduced capacity because accepting the order operating income by $ Requirement 3. As in requirement 1, assume that monthly capacity is 12,000 windows. Reward One is concerned that if it accepts the special order, its existing customers will immediately demand a price discount of $20 in the month in which the special order is being filled. They would argue that Reward One's capacity costs are now being spread over more units and that existing customers should get the benefit of these lower costs. Should Reward One accept the special order under these conditions? Show your calculations. Select the labels and then enter the amounts to calculate the net effect on operating income from accepting the special order under this scenario. (Use a minus sign or parentheses to show a net decrease in operating income from accepting the special order. Abbreviations used: Operating income Ol; Special order SO.) Net increase (decrease) in Ol from accepting SO Reward One should the one-time-only special order under this scenario because accepting the order operating 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_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

Advanced Management Accounting

Authors: Robert S. Kaplan, Anthony A. Atkinson, Kaplan And Atkinson

3rd Edition

0132622882, 978-0132622882

More Books

Students also viewed these Accounting questions

Question

Differentiate among the types of clinical interviews.

Answered: 1 week ago