8. Montoya Enterprises produces a sword that sells for $200. Although the company's production capacity is 3,000 swords per year, only 2,500 swords are currently being produced and sold. Humperdinck Corporation has offered to purchase 500 swords as a one-time special purchase at a price of $160 per sword. If the special order is accepted, Montoya Enterprises will have to incur additional fixed costs of $2,000. At Montoya's current level of production (2,500 swords), the Montoya Enterprises incurs the following costs: Direct materials $200,000 $100,000 $ 50,000 $ 85,000 Direct labor Variable factory overhead Fixed factory overhead What will be the impact on Montoya's Enterprises' income if the special order is accepted?
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- Cinnamon Depot bakes and sells cinnamon rolls for $1.75 each. The cost of producing 500,000 rolls in the prior year was: At the start of the current year, Cinnamon Depot received a special order for 18,000 rolls to be sold for $1.50 per roll. The company estimates it will incur an additional $1,000 in total fixed costs in order to lease a special machine that forms the rolls in the shape of a heart per the customers request. This order will not affect any of its other operations. Should the company accept the special order? (Show your work.)Marcotti Cupcakes bakes and sells a basic cupcake for $1.25. The cost of producing 600,000 cupcakes in the prior year was: At the start of the current year, Marcotti received a special order for 15,000 cupcakes to be sold for $1.10 per cupcake. To complete the order, the company must incur an additional $700 in total fixed costs to lease a special machine that will stamp the cupcakes with the customers logo. This order will not affect any of Marcottis other operations and it has excess capacity to fulfill the contract. Should the company accept the special order? (Show your work.)Dimitri Designs has capacity to produce 30,000 desk chairs per year and is currently selling all 30,000 for $240 each. Country Enterprises has approached Dimitri to buy 800 chairs for $210 each. Dimitris normal variable cost is $165 per chair, including $50 per unit in direct labor per chair. Dimitri can produce the special order on an overtime shift, which means that direct labor would be paid overtime at 150% of the normal pay rate. The annual fixed costs will be unaffected by the special order and the contract will not disrupt any of Dimitris other operations. What will be the impact on profits of accepting the order?
- Markson and Sons leases a copy machine with terms that include a fixed fee each month plus acharge for each copy made. Markson made 9,000 copies and paid a total of $480 in January. In April, they paid $320 for 5,000 copies. What is the variable cost per copy if Markson uses the high-low method to analyze costs?GEM Ltd leases a photocopy machine with terms that include a fixed fee each month plus a charge for each photocopy made. GEM made 5,000 copies and paid a total of $600 in January. In April, they paid $400 for 3,000 copies. Required: What is the variable cost per copy if GEM uses the high-low method to analyze costs? How much would GEM Ltd pay if it made 7,500 copies? (Hint: Need to solve for Fixed cost)Maple Inc. manufactures a product that costs $25 per unit plus $43,000 in fixed costs each month. Maple currently sells 6,000 of these units per month for $47 each. If Maple leased a machine for $12,000 a month, it could add features to the product that would allow it to sell for $53 each. It would cost an additional $9 per unit to add these features. How much would Maple's profit be affected if it leased the machine and added features to its product? Multiple Choice Increase $252,000 Decrease $252,000 Increase $6,000 Decrease $30,000
- Wok Around the Clock, Inc., sells specialty woks. In the current year it expects to incur $840,000 in variable costs and $120,000 in fixed costs to make and sell 10,000 woks at $100 each.If Wok Around the Clock accepts a special order from Hard Wok Cafe to purchase 1,000 woks at $80 each, how much would it make or lose on this special order?4 Lowwater Sailmakers manufactures sails for sailboats. The company has the capacity to produce 25,000 sails per year, but is currently producing and selling 20,000 sails per year. The following information relates to current production. If a special sales order is accepted for 4,500 sails at a price of $120 per unit, and fixed costs remain unchanged, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.) Sale price per unit $150 Variable costs per unit: Manufacturing Marketing and administratrve $60 $20 Total fixed costs: Manufacturing Marketing and administrative $600,000 S200,000 Increase by $160,000 ) Increase by $150,000 ) Increase by $140,000 Increase by S170,000 ) Increase by S180,000 ()Sunland, Inc., sells two types of water pitchers, plastic and glass. Plastic pitchers cost the company $25 and are sold for $35. Glass pitchers cost $24 and are sold for $45. All other costs are fixed at $572,000 per year. Current sales plans call for 14,000 plastic pitchers and 28,000 glass pitchers to be sold in the coming year.
- Crane, Inc., sells two types of water pitchers, plastic and glass. Plastic pitchers cost the company $30 and are sold for $40. Glass pitchers cost $26 and are sold for $47. All other costs are fixed at $280,800 per year. Current sales plans call for 14,000 plastic pitchers and 28,000 glass pitchers to be sold in the coming year. Crane, Inc., has just received a sales catalog from a new supplier that is offering plastic pitchers for $28. What would be the new contribution margin per unit if managers switched to the new supplier? What would be the new breakeven point if managers switched to the new supplier? (Use contribution margin per unit to calculate breakeven units. Round answers to 0 decimal places, e.g. 25,000.)Farmer Co. manufactures and sells widgets to the students at Texas A&M University. The widgets have a selling price of $10 per widget. It costs Farmer Co. $6.00 in variable costs to manufacture each widget. Altogether the company incurs $100,000 in fixed costs. This year the company had sales of $275,000. How many additional units did Farmer Co. sell above its breakeven point?(A) 25,000(B) 1,500 (C) 2,500(D) 3,000HighValu Incorporated manufactures a moderately priced set of lawn furniture (a table and four chairs) that it sells for $270. The company currently manufactures and sells 6, 900 sets per year. The manufacturing costs include $94 for direct materials and $54 for direct labor per set. The overhead charge per set is $44, which consists entirely of fixed costs. Highvalu is considering a special purchase offer from a large retail firm, which has offered to buy 690 sets per year for three years at a price of $186 per set. Highvalu has the available plant capacity to produce the order and expects no other orders or profitable alternative uses of the plant capacity. Required: 1. What is the total relevant cost per unit to produce the units requested by the retail firm? 2. What is the estimated net effect on annual operating income if Highvalu accepts the special sales order?