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kirill [66]
3 years ago
8

Wallyworld Company manufactures a product with the following costs per unit at the expected production level of 84,000 units: Di

rect materials $12 Direct labor 36 Variable manufacturing overhead 18 Fixed manufacturing overhead 24 The company has the capacity to produce 90,000 units. The product regularly sells for $120. If a wholesaler offered to buy 4,500 units for $100 each, the effect of the special order on income would be a
Business
1 answer:
atroni [7]3 years ago
5 0

Answer:

Income increased by $315,000

Explanation:

Since there is spare capacity available, we assume there are no incremental fixed costs and as such we only analyze relevant variable costs that vary with the order to identify the possible income effect.

Profit per unit = Order Selling price - Direct + Variable costs

Profit = 100 - 12 - 18 = $70

Total profit from the order = 70*4500 = $315,000

We do not include fixed costs as these will have to be paid regardless of the order. These fixed overheads are probably already absorbed fully given the current production level of 84000 units.

Hope that helps.

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An investment should be undertaken A) if the present value of the expected income stream associated with the investment is great
Alona [7]

Answer:

A) if the present value of the expected income stream associated with the investment is greater than the full cost of the investment project.

Explanation:

It is when the present value of the expected income stream associated with the investment is greater than the full cost of the investment project that the project is profitable. Most investments are undertaken with the aim of making profits.

The net present value can be used to determine if the present value of the expected income stream associated with the investment would be greater than the full cost of the investment project.

3 0
3 years ago
Suppose scalpers buy 8,000 tickets and resell them for $100 each. How much profit do the scalpers earn?
Paul [167]

Answer: See Explanation

Explanation:

Your question isn't complete but let me help out. Let's assume that Scalpers bought the tickets for $90 each. To find profit, the formula to use is:

= Total revenue - Total cost

Total revenue will be:

= 8000 × $100

= $800,000

Total cost will be:

= 8000 × $90

= $720,000

Profit = Total Revenue - Total cost

= $800,000 - $720,000

= $80,000

Therefore, profit will be $80,000.

8 0
3 years ago
Suppose that a small company that makes a standardized product is experiencing an increase in sales even though it has a small g
elena-s [515]

Answer: b. a centralized functional structure

Explanation:

Cost Leadership refers to a situation where a company is better at cost management that other companies in the industry. If a company can produce at a lower cost, they can capture more market share and be more profitable.

When a company wants to engage in cost Leadership one of the best structures to adopt is the Centralised functional structure. This is when decisions are usually made at a top management level in a company that is divided by functions such as Information Technology, Sales, Marketing etc.

By making the structure centralised, the company can make Standardised products on a company wide basis which is very effective in cost saving as the company is able to plan better and spend less because they will be <em>buying resources and producing in bulk</em>. That advantage from Economies of Scale will keep their costs low.

8 0
3 years ago
Sanborn Industries has the following overhead costs and cost drivers. Activity Cost Pool Cost Driver Est. Overhead Cost Driver A
denis23 [38]

Answer:

Predetermined manufacturing overhead rate= $240 per order

Explanation:

Giving the following information:

Ordering and Receiving Orders $ 120,000 500 orders

To calculate the predetermined manufacturing overhead rate we need to use the following formula:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= 120,000/500

Predetermined manufacturing overhead rate= $240 per order

5 0
3 years ago
Interest rates on a loan provide what key information?
vesna_86 [32]

Answer:

d

Explanation:

i just took the test my gee

6 0
3 years ago
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