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this is the whole question and the only information they gave me Special-Order Decision Smooth Move Company manufactures professional paperweights and has been approached by
this is the whole question and the only information they gave me
Special-Order Decision Smooth Move Company manufactures professional paperweights and has been approached by a new customer with an offer to purchase 15,000 units at a per-unit price of $9.00. The new customer is geographically separated from Smooth Move's other customers, and existing sales will not be affected. Smooth Move normally produces 36,000 units but plans to produce and sell only 65,000 in the coming year. The normal sales price is $14 per unit. Unit cost information is as follows: Direct materials $3.10 Direct labor 2.25 Variable overhead 1.15 Fixed overhead 1.80 Total $8.30 If Smooth Move accepts the order, no fixed manufacturing activities will be affected because there is sufficient excess capacity Required: 1. What are the alternatives for Smooth Move? 2. CONCEPTUAL CONNECTION: Should Smooth Move accept the special order? By how much will profit increase or decrease if the order is accepted? 3. CONCEPTUAL CONNECTION: Briefly explain the significance of the statement in the exercise that existing sales will not be affected" (by the special sale). Structuring the Sell-or-Process-Further Decision Bart's Butters receives 1,000,000 containers of raw milk each perlod that it subsequently processes into consumable milk by adjusting the fat content, adding vitamins, and destroying any potentially harmful bacteria. For Bart's, one container equals one gallon of consumable milk. Bart's then must decide whether to sell its consumable milk at split-off or to process it further into butter. Bart's normally sells consumable milk for a per-gallon price of $3. Alternately, each gallon of milk can be processed further into one-half tub of butter (e., one gallon of milk equals 0.5 gallon of butter) at an additional cost of $1.50 per tub of butter. Also, butter can be sold for $6.00 per tub. Required: 1. What is the contribution to income from selling the consumable milk? 2. What is the contribution to income from processing the consumabile milk into butter? 3. Should Bart's continue to sell the consumable milk or process it further into butter? Process the consumable milk into butter Sell the consumable milk without processing Structuring the Sell-or Process-Further Decision Bart's Butters receives 1,000,000 containers of raw milk each period that it subsequently processes into consumable milk by adjusting the fat content, adding vitamins, and destroying any potentially harmful bacteria. For Bart's, one container equals one gallon of consumable milk. Bart's then must decide whether to sell its consumable milk at split-off or to process it further into butter. Bart's normally sells consumable milk for a per-gallon price of $3. Alternately, each gallon of milk can be processed further into one-half tub of butter (le, one gallon of milk equals 0.5 gallon of butter) at an additional cost of $1.50 per tub of butter. Also, butter can be sold for $6.00 per tub. Required: 1. What is the contribution to income from selling the consumable milk? 2. What is the contribution to income from processing the consumable milk into butter? 3. Should Bart's continue to sell the consumable milk or process it further into butter? Process the consumable milk into butter Sell the consumable milk without processing Step by Step Solution
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