Question
Violet has received a special order for 110 units of its product. The product normally sells for $2,900 and has the following manufacturing costs: Per
Violet has received a special order for 110 units of its product. The product normally sells for $2,900 and has the following manufacturing costs: |
| Per unit |
Direct materials | $670 |
Direct labor | 340 |
Variable manufacturing overhead | 500 |
Fixed manufacturing overhead | 1,120 |
Unit cost | $2,630 |
Assume that Violet has sufficient capacity to fill the order without harming normal production and sales. What minimum price should Violet charge to achieve a $13,200 incremental profit? |
a. | $1,510 |
b. | $2,630 |
c. | $1,760 |
d. | $1,630 |
Potter has received a special order for 16,000 units of its product at a special price of $19. The product normally sells for $26 and has the following manufacturing costs: |
| Per unit |
Direct materials | $9 |
Direct labor | 6 |
Variable manufacturing overhead | 3 |
Fixed manufacturing overhead | 3 |
Unit cost | $21 |
Potter is currently operating at full capacity and cannot fill the order without harming normal production and sales. If Potter accepts the order, what effect will the order have on the companys short-term profit? |
a. | $96,000 increase |
b. | $16,000 decrease |
c. | $16,000 increase |
d. | $112,000 decrease |
Cranberry has received a special order for 130 units of its product at a special price of $1,700. The product normally sells for $2,200 and has the following manufacturing costs: |
| Per unit |
Direct materials | $620 |
Direct labor | 320 |
Variable manufacturing overhead | 420 |
Fixed manufacturing overhead | 520 |
Unit cost | $1,880 |
Assume that Cranberry has sufficient capacity to fill the order without harming normal production and sales. If Cranberry accepts the order, what effect will the order have on the companys short-term profit? |
a. | $44,200 increase |
b. | $23,400 decrease |
c. | $23,400 increase |
d. | $67,600 decrease |
Walnut has received a special order for 2,500 units of its product at a special price of $170. The product normally sells for $210 and has the following manufacturing costs: |
| Per unit |
Direct materials | $62 |
Direct labor | 30 |
Variable manufacturing overhead | 40 |
Fixed manufacturing overhead | 75 |
Unit cost | $207 |
Walnut is currently operating at full capacity and cannot fill the order without harming normal production and sales. If Walnut accepts the order, what effect will the order have on the companys short-term profit? |
a. | Zero |
b. | $92,500 increase |
c. | $100,000 decrease |
d. | $92,500 decrease |
Almond has received a special order for 13,000 units of its product at a special price of $56. The product normally sells for $67 and has the following manufacturing costs: |
| Per unit |
Direct materials | $22 |
Direct labor | 17 |
Variable manufacturing overhead | 8 |
Fixed manufacturing overhead | 9 |
Unit cost | $56 |
Assume that Almond has sufficient capacity to fill the order. If Almond accepts the order, what effect will the order have on the companys short-term profit? |
a. | $143,000 increase |
b. | $260,000 decrease |
c. | $117,000 increase |
d. | Zero |
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