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xxMikexx [17]
3 years ago
12

6. Assume that as of August 1, 3,000 units of flat panel displays have been produced and sold during the current year. Analysis

of the domestic market indicates that 2,000 additional units are expected to be sold during the remainder of the year at the normal product price determined under the product cost method. On August 3, Crystal Displays Inc. received an offer from Maple Leaf Visual Inc. for 800 units of flat panel displays at $225 each. Maple Leaf Visual Inc. will market the units in Canada under its own brand name, and no variable selling and administrative expenses associated with the sale will be incurred by Crystal Displays Inc. The additional business is not expected to affect the domestic sales of flat panel displays, and the additional units could be produced using existing factory, selling, and administrative capacity. a. Prepare a differential analysis of the proposed sale to Maple Leaf Visual Inc. If an amount is zero, enter "0". Differential Analysis Reject (Alt. 1) or Accept (Alt. 2) Order August 3 Reject Order (Alternative 1) Accept Order (Alternative 2) Differential Effects (Alternative 2) Revenues $ $ $ Costs Variable manufacturing costs Profit (loss) $ $ $ Feedback 6. a. Subtract the additional variable manufacturing costs from the additional revenues. Determine the differential effect on income of the revenues, costs, and income (loss). b. Based on the differential analysis in part (a), should the proposal be accepted
Business
1 answer:
murzikaleks [220]3 years ago
4 0

Additional part of Question:

Crystal Displays Inc. recently began production of a new product, flat panel displays, which required the investment of $1,500,000 in assets. The costs of producing and selling 5,000 units of flat panel displays are estimated as follows: 1 Variable costs per unit: 2 Direct materials $120.00 3 Direct labor 30.00 4 Factory overhead 50.00 5 Selling and administrative expenses 35.00 6 Total variable cost per unit $235.00 7 Fixed costs: 8 Factory overhead $250,000.00 9 Selling and administrative expenses 150,000.00 Crystal Displays Inc. is currently considering establishing a selling price for flat panel displays. The president of Crystal Displays has decided to use the cost-plus approach to product pricing and has indicated that the displays must earn a 15% return on invested assets.

Answer:

<h2>Crystal Displays Inc.</h2>

Differential Analysis of Maple Leaf Visual Inc.'s Order

                                             Reject (Alt. 1)         Accept (Alt. 2)

Order August 3                         0                          800

Differential Effects

Revenues                                 $0                       $180,000

Variable manufacturing costs $0                       $160,000

Profit (loss)                                $0                       $20,000

Based on the differential analysis above, the proposal should be accepted.  Crystal Displays Inc. will increase its profit by $20,000 from the additional order without spending additional selling, and other fixed costs.

Explanation:

a) Data and Calculations:

Investment in producing panel displays = $1,500,000

The costs of producing and selling 5,000 units of flat panel displays are estimated as follows:

1 Variable costs per unit:

2 Direct materials $120.00

3 Direct labor           30.00

4 Factory overhead 50.00

5 Selling and administrative expenses 35.00

6 Total variable cost per unit $235.00

7 Fixed costs:

8 Factory overhead $250,000.00

9 Selling and administrative expenses 150,000.00

Product cost using cost-plus pricing:

1 Variable costs per unit:

2 Direct materials       $120.00

3 Direct labor                  30.00

4 Factory overhead       50.00

5 Selling administrative

expenses                      35.00

Total variable

manufacturing cost $235.00 *5,000  $1,175,000.00

Contribution                                           $625,000.00

Fixed Costs:

Factory overhead                                  $250,000.00

9 Selling and administrative expenses   150,000.00

Expected returns on invested assets

  = 15% of $1,500,000 =                          $225,000

Income Statement:

Sales Revenue (5,000 x $360)          $1,800,000.00

Manufacturing cost $235.00                1,175,000.00

Contribution                                         $625,000.00

Fixed Costs:

Factory overhead                                $250,000.00

Selling and administrative expenses    150,000.00

Expected returns on invested assets

  = 15% of $1,500,000 =                          $225,000

Special order from Maple Leaf Visual Inc.:

Flat panel displays = 800 units

Price =  $225 each

Cost of production per unit = $200 ($235 - $35)

Contribution per unit = $25 ($225 - $200)

Differential analysis is a managerial technique which Crystal Displays Inc. can use to decide to accept or reject the additional order from Maple Leaf Visual Inc. for 800 units of flat panel displays at $225 each.  After the analysis, it appears that Crystal Displays Inc. will make a profit of $25 per unit or a total profit of $20,000 from the additional order.  Since this additional order does not require extension of the existing production capacity and costs, it looks reasonable to suggest that the business from Maple Leaf should be accepted.

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3 years ago
Identify the percent increase in total sales and the percent increase in sales of trench coats. Then find which percent of incre
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The percentage increase in the total sales for 2006 is 15% while the increase in sales of the trench coats is 23.3%; therefore the percentage increase in total sales of trench coats is 8.3% faster.

Computation:

1. The total amount of sales for 2006 and 2007:

\begin{aligned}\text{Sales of 2006}&=103+297+210+213+137\\&=960\end{aligned}

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2. Now, the percentage increase will be determined for the total number of coats and trench coats:

For the total number of coats, the values used will be the total sales of 2006, and total sales of 2007.

\begin{aligned}\text{Percentage Increase}&=\dfrac{\text{Sales of 2007}-\text{Sales of 2006}}{\text{Sales of 2006}}\times100\\&=\dfrac{1104-960}{960}\times100\\&=15\%\end{aligned}

For the trench coats the values used will be the sale of trench coats in 2006 and 2007.

\begin{aligned}\text{Percentage Increase in Sale of Trench Coat}&=\dfrac{\text{Sales of 2007}-\text{Sales of 2006}}{\text{Sales of 2006}}\times100\\&=\dfrac{127-103}{103}\times100\\&=23.33\%\end{aligned}

3. Now, the  net percentage increase in sales due to the trench coats is computed as follows:

\begin{aligned}\text{Net Percentage Change}&=\text{\text{Percentage Increase in Trench Coat}-\text{Percentage Increase}}\\&=23.33\%-15\%\\&=8.3\%\end{aligned}

Therefore, the correct option is option B. Sales of trench coats increased 8. 3 percentage points faster than total coat sales.

To know more about percentages of increase in sales, refer to the link:

brainly.com/question/45525

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2 years ago
When the real exchange rate decreases, a country's net exports will __________?
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Decrease is the answer
5 0
3 years ago
A buyer is looking for a multi-family option that includes common area maintenance and will allow him to take advantage of tax i
Deffense [45]

Answer:

If you by a condo, you can deduct your mortgage interests from your gross income, property taxes are also deductible, and you can also get a homestead exemption on your condo since it is your home.

Co-ops on the other hand are corporations that own a building, and you own shares of that corporation. It is very difficult and only under certain circumstances, you can deduct mortgage interest expenses on a co-op, but generally not. You cannot deduct property taxes since you do not own any property yourself and you cannot claim a homestead exemption for a co-op for the same reason.

That is why co-ops are usually cheaper than condos.

3 0
3 years ago
Arnold, a single individual, has adjusted gross income of $65,000 in the current year. Arnold donates the following items to his
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Answer:

Option A. $15,400

Explanation:

The net deduction allowed as an charitable contributions are as under:

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Cost $6000  

FMV <u>$22000</u>                   $16000

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Net Deduction                 $15,400

The amount that qualifies as charitable contribution for the year is $15400.

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3 years ago
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