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tatiyna
3 years ago
13

Stewart Corporation manufactures solar powered calculators. The company can manufacture 1,100,000 calculators a year at a variab

le cost of $2,200,000 and a fixed cost of $1,100,000. Based on management’s projections for next year, 950,000 calculators will be sold at the regular price of $15.00 each. A special order has been received for 230,000 calculators to be sold at a 60% discount off the regular price. Total fixed costs would be unaffected by this order. The company's net operating income will be increased as a result of the special order by: (Do not round your intermediate calculations.)
Business
1 answer:
NeX [460]3 years ago
7 0

Answer:

If the special offer is accepted, the net operating income will decrease in $120,000

Explanation:

Giving the following information:

Total variable cost= $2,200,000

Fixed cost= $1,100,000

Based on management’s projections for next year, 950,000 calculators will be sold at the regular price of $15.00 each. A special order has been received for 230,000 calculators to be sold at a 60% discount off the regular price.

Because the company can't provide the 950,000 units and the 230,000 special offer, the offer will cannibalize sales from the 950,00 units.

Special offer sale price= 15*0.4= $6

Unitary variable cost= 2,200,000/1,100,000= $2 per unit

<u>First, we will calculate the net income without the special offer</u>:

Sales= 950,000*15= 14,250,000

Total variable cost= 950,000*2= (1,900,000)

Contribution margin= 12,350,000

Fixed costs= (1,100,000)

Net operating income= 11,250,000

<u>With the special offer:</u>

Sales= (230,000*6) + (870,000*15)= 14,430,000

Total variable cost= (2,200,000)

Contribution margin= 12,230,000

Fixed costs= (1,100,000)

Net operating income= $11,130,000

If the special offer is accepted, the net operating income will decrease in $120,000

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6 0
3 years ago
Vaughn Manufacturing has fixed costs of $30000 per year. Its warehouse sells wine with variable costs of 90% of its unit selling
oksian1 [2.3K]

Answer:

$300,000

Explanation:

Calculation for How much in sales does Vaughn need to break even per year

Using this formula

Sales needed to break even=Fixed cost/(1-Unit selling price Variable costs)

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Therefore How much in sales does Vaughn need to break even per year will be $300,000

8 0
3 years ago
Budget Performance Reports for Cost Centers Partially completed budget performance reports for Delmar Company, a manufacturer of
julia-pushkina [17]

Answer:

Delmar Company

Delmar Company

Budget Performance Report—Vice President, Production

For the Month Ended June 30

Plant                       Actual           Budget      Over Budget   (Under) Budget

Eastern Region  $4,200,000   $4,250,000                           $(50,000)

Central Region      6,175,000     6,200,000                             (25,000)

Western Region    8,515,000     8,200,000    $375,000

                         $18,890,000  $18,650,000    $375,000      $(75,000)

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Budget Performance Report—Manager, Western Region Plant

For the Month Ended June 30

Department                  Actual       Budget     Over Budget   (Under) Budget

Chip Fabrication      $4,300,000   $4,000,000   $300,000

Electronic Assembly  2,575,000     2,500,000       75,000

Final Assembly           1,640,000      1,700,000                             $(60,000)

                                 $8,515,000  $8,200,000   $375,000         $(60,000)

b. Memo to Randi Wilkes, Vice President

To: Vice President, Production

From: FC

Subject: Budget Performance Report—For the Month Ended June 30

Date: July 3, 2021

The above-mentioned subject refers.

The production division incurred $315,000 more costs than budgeted.  The extra costs are reflected in the increasing cost of producing light duty motors in the Western Region.  The overall increase is caused by the regional differences in Chip fabrication and Electronic Assembly.

There is a need to review production activities with these two production processes with a view to reducing costs.

Regards,

Explanation:

a) Data and Calculations:

Delmar Company

Budget Performance Report—Vice President, Production

For the Month Ended June 30

Plant                       Actual           Budget      Over Budget   (Under) Budget

Eastern Region  $4,200,000   $4,250,000                           $(50,000)

Central Region      6,175,000     6,200,000                             (25,000)

Western Region     (g)                       (h)                $(i)

                             $(j)                      $(k)                $(l)             $(75,000)

Delmar Company

Budget Performance Report—Manager, Western Region Plant

For the Month Ended June 30

Department                  Actual      Budget     Over Budget   (Under) Budget

Chip Fabrication      $(a)                $(b)                $(c)

Electronic Assembly 2,575,000  2,500,000       75,000

Final Assembly          1,640,000   1,700,000                             $(60,000)

                                   $(d)               $(e)              $(f)                 $(60,000)

Delmar Company

Budget Performance Report—Supervisor, Chip Fabrication

For the Month Ended June 30

Cost                             Actual      Budget     Over Budget     (Under) Budget

Factory wages    $1,450,000  $1,200,000    $250,000

Materials               1,575,000     1,600,000                               $(25,000)

Power and light      945,000       900,000         45,000

Maintenance          330,000       300,000         30,000

                         $4,300,000  $4,000,000    $325,000          $(25,000)

a. = $4,300,000

b. = $4,000,000

c. = $300,000 ($325,000 - $25,000)

d. = $8,515,000 ($4,300,000 + 2,575,000 + 1,640,000)

e. = $8,200,000 ($4,000,000 + 2,500,000 + 1,700,000)

f. = $375,000 ($300,000 + 75,000)

g. = $8,515,000

h. = $8,200,000

i. = $375,000

j. = $18,890,000 ($4,200,000 + 6,175,000 + 8,515,000)

k. = $18,650,000 ($4,250,000 + 6,200,000 + 8,200,000)

l. = $375,000

8 0
2 years ago
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where g = growth rate

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g = 49260/759000.

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