Reference no: EM139706
Anderson Manufacturing makes a single product. Budget information regarding the current period is given below:
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Revenue (100,000 units at $8.00)
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$800,000
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Direct materials
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150,000
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Direct labor
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125,000
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Variable manufacturing overhead
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235,000
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Fixed manufacturing overhead
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110,000
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Net income
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$180,000
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Dye Company approaches Anderson with a special order for 15,000 units at a price of $7.50 per unit. Variable costs will be the same as the current production and accepting the special order will not have any impact on the rest of the company's orders. However, Anderson is operating at capacity and will incur an additional $50,000 in fixed manufacturing overhead if the order is accepted..
Q1. What is the incremental income (loss) associated with accepting the special order?
A) ($14,000)
B) $36,000
C) ($23,500)
D) $27,000
Q2. What is the incremental revenue associated with accepting the special order?
A) $170,000
B) $112,500
C) $70,000
D) $120,000
Q3. The Dynamaco Company uses cost-plus pricing with a 50% mark-up. The company is currently selling 100,000 units at $12 per unit. Each unit has a variable cost of $6. In addition, the company incurs $200,000 in fixed costs annually. If demand falls to 80,000 units and the company wants to continue to earn a 50% return, what price should the company charge?
A) $12.75
B) $14.55
C) $13.50
D) $10.95
Taylor's Treasures has collected the following information over the last six months.
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Month
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Units produced
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Total costs
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March
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10,000
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$25,600
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April
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12,000
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26,200
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May
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18,000
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27,600
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June
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13,000
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26,450
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July
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12,000
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26,000
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August
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15,000
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26,500
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Q4. Using the high-low method, what is the variable cost per unit?
A) $0.25
B) $2.56
C) $0.22
D) $2.00
Q5. Using the high-low method, what is the total fixed cost?
A) $1,000
B) $4,500
C) $23,100
D) $5,600
Q6. A manufacturing company produces and sells 20,000 units of a single product. Total products costs are $14 per unit. If total sales were $560,000 what markup percentage is the company using?
A) 100%
B) 4%
C) 200%
D) 50%
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