<u>Solution and Explanation:</u>
The data of SAG of special order is given below:
Cost per unit = $3.50
, Allocated fix cost = $1.50
, Number of units in order = 15000
<u>Calculated the total cost of the special order as follows:
</u>
Incremental cost per unit = Cost per unit-Allocated fix cost =$(3.50 minus 1.50) =$2
Incremental cost per unit=cost per unit-allocated fix cost =$(3.50 minus1.50) =$2
Total incremental cost 15000 unit = number of units in order x Incremental cost per unit =15000 multiply $2 =$30000
Therefore, total cost of the special order is $30000
b) Offering price by ETU = $35000. Hence, the offer made by ETU would affect the short term of the special order.
Contribution cost = $(35000 minus 30000) =$5000
Explanation:
a. The journal entries are as follows
On June 15
Retained earning A/c Dr $60,000
To Dividend payable $60,000
(Being cash dividend declared)
On June 30
No journal entry is required
On June 10
Dividend payable $60,000
To Cash $60,000
(Being the dividend is paid)
On Dec 15
Retained earning A/c Dr $64,000
To Dividend payable $64,000
(Being cash dividend declared)
On Dec 31
No journal entry is required
b. Now the dividend is reported on the retained earning statements in a negative sign whereas the dividend payable is reported on the current liabilities of the balance sheet
The answer is: All of the above
