Wilson Blossom is a leading producer of vinyl replacement windows. The companys growth strategy focuses on developing domestic markets in large metropolitan areas. The company operates a single manufacturing plant in Kansas City with an annual capacity of 500,000 windows. Current production is budgeted at 450,000 windows per year, a quantity that has been constant over the past three years. Based on the budget, the accounting department has calculated the following unit costs for the windows:

Direct materials		$60.00
Direct labor		20.00
Manufacturing overhead		16.00
Selling and administrative		14.00
Total unit cost		$110.00

The companys budget includes $5,400,000 in fixed overhead and $3,150,000 in fixed selling and administrative expenses. The windows sell for $150.00 each. A 2% distributors commission is included in the selling and administrative expenses.

(a1)

Correct answer icon

Your answer is correct.

Calculate variable overhead per unit and variable selling and administrative costs per unit. (Round answers to 2 decimal places, e.g. 15.25.)

Variable overhead per unit	$ enter a dollar amount rounded to 2 decimal places
Variable selling and administrative costs per unit	$ enter a dollar amount rounded to 2 decimal places

(a2)

Ayayai, Finlands second largest homebuilder, has approached Wilson with an offer to buy 75,000 windows during the coming year. Given the size of the order, Ayayai has requested a 30% volume discount on Wilsons normal selling price. Calculate the contribution from special order. (If net contribution is negative, enter amount with a negative sign, e.g. -5,285 or parentheses, e.g. (5,285). Round answer to 0 decimal places, e.g. 8,971.)

Net contribution from special order

$ enter the net contribution from special order in dollars rounded to 0 decimal places

Should Wilson grant Ayayai s request? select an option Yes No

(c1)

Return to the original data. Monk Builders has just signed a contract with the state government to replace the windows in low-income housing units throughout the state. Monk needs 80,000 windows to complete the job and has offered to buy them from Wilson at a price of $110.00 per window. Monk will pick up the windows at Wilsons plant, so Wilson will not incur the $2 per window shipping charge. In addition, Wilson will not need to pay a distributors commission, since the windows will not be sold through a distributor. Calculate the contribution from special order, contribution lost from regular sales and the net contribution from special order.

Contribution from special order	$ enter a dollar amount
Contribution lost from forgone regular sales	$ enter a dollar amount
Net contribution from special order	$enter a dollar amount

(c2)

Should Wilson accept Monk's offer?

Wilson select an option should/ should not accept Monk's offer.

(d1)

If Wilson decides to accept Monks offer, it will need to find an additional 30,000 windows to meet both the special order and normal sales. Kingbird Panes has offered to provide them to Wilson at a price of $130.00 per window. Kingbird Panes will deliver the windows to Wilson, and Wilson would then distribute them to its customers. Calculate total contribution from outsourcing.

Total contribution from outsourcing

$enter the total contribution from outsourcing in dollars

(d2)

Should Wilson outsource the production of the extra windows to Kingbird Panes? select an option Yes No