1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Drupady [299]
3 years ago
6

Harrison Ford Company has been approached by a new customer with an offer to purchase 10,000 units of its model IJ4 at a price o

f $5 each. The new customer is geographically separated from the company's other customers, and existing sales would not be affected. Harrison normally produces 75,000 units of IJ4 per year but only plans to produce and sell 60,000 in the coming year. The normal sales price is $12 per unit. Unit cost information for the normal level of activity is as follows: Fixed overhead will not be affected by whether or not the special order is accepted.
Direct Materials $1.75

Direct Labor 2.50

Variable Overhead 1.50

Fixed Overhead 3.25

Total $9.00


1. What are the relevant costs and benefits of the two alternatives (accept or reject the special order)?

2. By how much will operating income increase or decrease if the order is accepted? by $____??
Business
1 answer:
pychu [463]3 years ago
3 0

Answer:

If the offer is accepted, the income will decrease in $7,500.

Explanation:

Giving the following information:

Harrison Ford Company has been approached by a new customer with an offer to purchase 10,000 units of its model IJ4 for $5 each.

Unitary variable cost:

Direct Materials= $1.75

Direct Labor= $2.50

Variable Overhead= $1.50

1) Because it is a special offer and there is unused capacity, we will not have into account the fixed costs.

Accepting the offer:

Relevant cost= Unitary variable cost

Relevant cost= 1.75 + 2.5 + 1.50= $5.75

Relevant benefits= $5

2) Effect on income= 10,000*5 - 10,000*5.75= -$7,500

If the offer is accepted, the income will decrease in $7,500.

You might be interested in
The Bradshaw Company's most recent dividend was $6.75. The historical dividend payment by the company shows a constant growth ra
Paha777 [63]

Answer:

$236.25

Explanation:

Given that,

Recently dividend paid, D0 = $6.75

Growth rate of dividend, g = 5 percent per year

Required rate of return, rr = 8 percent

Therefore, the stock price is calculated as follows:

= [D0 × (1 + g)] ÷ (rr - g)

= [6.75 × (1+5%)] ÷ (8% - 5%)

= $236.25

Hence, the maximum you would be willing to pay for a share of its common stock if your required rate of return is 8 percent is $236.25.

3 0
3 years ago
Lezos LLC, a chain of international restaurants, has operations in more than 50 countries around the world. The company has a pr
Vika [28.1K]

Answer:

c. financial resources

Explanation:

Based on the information provided it can be said that the most likely reason for the success of Lezos in international markets are their financial resources. That is because (like mentioned in the question) they are able to keep supporting these projects financially for as much time as they need in order for them to actually become successful. Therefore there is no other factor in play except for money.

8 0
3 years ago
Read 2 more answers
The inflationary spiral explains the causes and effects of high inflation.
Svetllana [295]

Answer:

A. Producers raise prices to continue to make a profit.

Explanation:

6 0
3 years ago
Sierra Mountain Mining paid $ 827 comma 000 for the right to extract mineral assets from a 550 comma 000​-ton deposit. In additi
shtirl [24]

Answer:

<h2>Sierra Mountain Mining</h2>

General Journal:

a) Purchase of Minerals:

a) Debit Minerals Asset $827,000

Credit Cash Account $827,000

To record the purchase of the right to extract mineral assets.

b) Debit Minerals Asset $53,000

Credit Cash Account $53,000

To record the payment of filing fee ($700), license fee ($2,300), and geological survey ($50,000) to secure the asset.

c) Debit Depletion Expense $64,000

Credit Accumulated Depletion $64,000

To record depletion expense for the period.

Explanation:

a) Calculation of Depletion Expense

Depletion Rate = Mineral Assets/Mineral Deposit = $880,000/550,000 = $1.6

Depletion Expense for the period = 40,000 x $1.60 = $64,000

b) Depletion Method is a technique for allocating the cost of extracting natural resources such as timber, minerals, and oil from the earth.  Depletion is like depreciation and amortization.  Depletion is used for natural resources, depreciation for tangible non-current assets, while amortization is used for intangibles.  Depletion, like depreciation and amortization, is a non-cash expense that lowers the cost value of an asset incrementally through scheduled charges to income.

4 0
2 years ago
Determine if the items below are characteristics of taxes, subsidies or both. Assume that markets are perfectly competitive.
Allisa [31]

Answer:

1) subsidies as the seller will receive a higher amount that the market price

2) taxes because traslation effect considering demand price-elasticity

3) taxes

4) subsidies will increase the amount recieve by sellers. (for taxes it act as a intermediate it retains the taxes levied and then has to give them to the government thus, aren't an increase in they proceeds

5) taxes, the subsidies are government espending

6) taxes, because traslation effect.

Explanation:

5 0
3 years ago
Other questions:
  • Clayton, inc. purchased a van on january 1, 2016, for $850,000. estimated life of the van was five years, and its estimated resi
    9·1 answer
  • Assume that interest rate parity exists and will continue to exist. The U.S. interest rate was 4% while the Singapore interest r
    8·1 answer
  • george forgot to pay his monthly life insurance premium that was due march 1. the policy had a face value of $100,000. on march
    10·1 answer
  • Which is the other term for creative thinking?
    10·2 answers
  • Following is Stanley Black &amp; Decker’s income statement for 2016 (in millions): STANLEY BLACK &amp; DECKER, INC. Income State
    11·1 answer
  • Decisions today are becoming _____ complex, due to _____ uncertainty in the decision environment. Question 25 options: 1) less,
    9·1 answer
  • A restaurant offers hamburgers and cheeseburgers on its menu. Customers order a hamburger, indicate how it is to be cooked and w
    8·1 answer
  • Compare and contrast the protection to intellectual property provided by trade secrets relative to that provided by patents. Wha
    7·1 answer
  • The seller agrees to pay the listing real estate agent a commission of 5%. The property is listed at $400,000, the buyer offers
    13·1 answer
  • Snap_group166
    8·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!