Reference no: EM133042098
Questions -
Q1. Wilson Sandhill is a leading producer of vinyl replacement windows. The company's growth strategy focuses on developing domestic markets in large metropolitan areas. The company operates a single manufacturing plant in Kansas City with an annual capacity of 500,000 windows. Current production is budgeted at 450,000 windows per year, a quantity that has been constant over the past three years. Based on the budget, the accounting department has calculated the following unit costs for the windows:
Direct materials $45.00
Direct labor 18.00
Manufacturing overhead 18.00
Selling and administrative 14.00
Total unit cost $95.00
The company's budget includes $5,400,000 in fixed overhead and $3,150,000 in fixed selling and administrative expenses. The windows sell for $150.00 each. A 2% distributor's commission is included in the selling and administrative expenses. Calculate variable overhead per unit and variable selling and administrative costs per unit.
Q2. Monty, Finland's second largest home builder, has approached Wilson with an offer to buy 75,000 windows during the coming year. Given the size of the order, Monty has requested a 40% volume discount on Wilson's normal selling price. Calculate the contribution from special order. Should Wilson grant Monty's request?