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Vladimir [108]
3 years ago
14

It costs Fortune Company $12 of variable and $5 of fixed costs to produce one bathroom scale which normally sells for $35. A for

eign wholesaler offers to purchase 1,000 scales at $15 each. Fortune would incur special shipping costs of $1 per scale if the order were accepted. Fortune has sufficient unused capacity to produce the 1,000 scales.
If the special order is accepted, what will be the effect on net income?

a)$2,000 increaseb)$2,000 decreasec)$3,000 decreased)$15,000 increase
Business
2 answers:
lianna [129]3 years ago
7 0

Answer:

c)$3,000 decrease

Explanation:

The sales less the variable cost gives the contribution margin. The contribution margin less the fixed cost gives the net operating income.

Considering the data given with respect to the special order, the net income would be equal to the sales less the additional cost which are variable and fixed.

net profit/(loss) from order

= 1000 ($15 - $5 - $12 - $1)

= ($3000)

marta [7]3 years ago
4 0

Answer:

a)$2,000 increase

Explanation:

As fixed cost is the irrelevant expense in the decision making for the special order. It is avoidable cost.

Special Order

Quantity 1000 scales

Price                            $15 per sale

Less: Variable cost     $12 per sale

Less: Shipping cost    $1 per sale

Contribution margin   $2 per scale

Total Contribution margin = 1,000 scales x $2 per scale = $2,000

Net Income will increase by $2,000 if the special order is accepted.

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Eldrick bought a certificate that allows him to apply for a tax deed after a certain period. what did eldrick purchase?
AnnyKZ [126]
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7 0
3 years ago
In most cases, whether the contract has not yet been performed (an executory contract) or has been fully performed (an executed
Jlenok [28]

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It should be noted that a contract that is signed by a minor unless in some rare exceptions is normally void and therefore, the minor can disaffirm the contract.

8 0
3 years ago
Titus Company produced 5,900 units of a product that required 3.546 standard hours per unit. The standard fixed overhead cost pe
natta225 [31]

Answer:

$417 A.

It is an adverse variance.

Explanation:

Fixed factory overhead volume variance is the difference between budgeted output at 100% normal capacity and actual production volume multiplied by standard fixed overhead cost per unit.

Formula

Fixed factory overhead volume variance = (budgeted standard hours for 100% normal capacity - Actual standard output hours) × standard fixed overhead cost per unit.

Calculation

Since 5900 units of a product was produced in 3.546 standard hours per unit, total actual standard hour is therefore;

= 5900×3.546

=20,921 hours

Overhead cost per unit = $1.10 per hour

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Recall the formula for fixed factory overhead volume variance is =(budgeted standard hours for 100% normal output- actual standard output hours)× standard fixed overhead per unit.

Therefore;

Fixed factory overhead volume variance =(21,300 hours - 20,921 hours)× $1.10

=379 hours × $1.10

=$417 A

It is therefore an adverse variance.

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3 years ago
Redeker Company purchased equipment on January 1, 2016, for $90,000. It is estimated that the equipment will have a $5,000 salva
Ksenya-84 [330]

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6 0
2 years ago
Read 2 more answers
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