Determine the net advantage or disadvantage profit increase

Reference no: EM13596334

Problem 5 (20 points): Amherst produces a single product. The company's March 2010 income statement is as follows:

Sales $72,000
Cost of goods sold - 54,000
Gross profit $ 18,000
Selling and administrative 5,000
Net income $ 13,000

There were no beginning or ending inventories of work-in-process or finished goods. Amherst's full manufacturing costs were as follows:

Direct materials (1,200 units x $10)
$12,000
Direct labor (1,200 units x $16) 19,200
Variable manufacturing overhead (1,200 units x $9) 10,800
Fixed manufacturing overhead 12,000
Total $54,000
Average cost per unit $45

Selling and administrative expenses are all fixed. Amherst just received a special order from a firm in Mexico to purchase 900 units at $50 each. The order will not affect the selling price to regular customers.

a. Prepare a differential analysis of the relevant costs and revenues associated with the decision to accept or reject the special order, assuming Amherst has excess capacity.
b. Determine the net advantage or disadvantage (profit increase or decrease) of accepting the order, assuming Amherst does not have excess capacity.

Reference no: EM13596334

Questions Cloud

Is the incremental income 950 since thats how much they : pep manufacturing produces product k in batches of 4000 gallons at .60 per gallon. product k can be sold without

Calculate the masses of the solids you must measure out to : calculate the masses of the solids you must measure out to prepare 100ml of 0.025m kno3.....you must include the waters

Components of the accounting equation required the : components of the accounting equation required the following three requirements are independent of each other.a. craigs

Question an isotope of sodium 24na has a half-life of 15 : question an isotope of sodium 24na has a half-life of 15 hours. a sample of this isotope has mass 2 g.a find the

Determine the net advantage or disadvantage profit increase : problem 5 20 points amherst produces a single product. the companys march 2010 income statement is as follows sales

We will make about 350 ml of approx 02 m naoh aq solution : we will make about 350 ml of approx. 0.2 m naoh aq solution by diluting 6 m naoh aq. calculate the approximate volume

The monitor estimates this value by calculating the slope : question a cardiac monitor is used to measure the heart rate of a patient after surgery. it compiles the number of

Can someone help me with this financial accounting tools : can someone help me with this. financial accounting tools for business decision making 6th edition. kimmel weygandt

A firm produces perishable food at the cost of 25 per case : a firm produces perishable food at the cost of 25 per case and in batches of 100 cases. it sells the product to a

User Account

All Pages