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Alborosie
3 years ago
10

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:
Marizza181 [45]3 years ago
8 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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Answer:

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Question 5

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Question 8

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3 years ago
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3 years ago
A company purchased 300 units for $60 each on January 31. It purchased 150 units for $25 each on February 28. It sold a total of
Daniel [21]

Answer:

Weighted-average inventory costing method Ending Inventory = $ 9666.67= $ 9667

Explanation:

Date           Particulars       Units   Unit Cost        Total Cost

January 31  Purchases          300             $ 60        $ 18,000

February 28   Purchases       150             $ 25          $3750

Total                                       450                               $ 21,750

Weighted-average inventory costing method=  Total Cost/ Total Units=

                                    $ 21,750/450= $48.33 purchase price per unit

Sales              250 units       at     $ 70    =      $ 17500

Ending Units =  Purchases-Sales = 450-250= 200

Weighted-average inventory costing method Ending Inventory = $ 9666.67

200 units at 448.33=  $ 9666.67= $ 9667

3 0
3 years ago
Read 2 more answers
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