Reference no: EM131265594
Yorktown Industrial Supply Company (YIS) manufactures and sells electrical components used primarily by recreational vehicle manufacturers. Typically Yorktown has multiyear supply agreements with its major customers. One of those customers, Blue Sky RV (BSRV), is near the end of the first year of a threeyear contract that calls for Blue Sky to buy at least 1,000 sets of electronic component packages for its recreational vehicles from YIS at a price of $1,200 per unit in year one and $1,225 in year two and $1,250 in year three.
At the end of the first year of the contract, Blue Sky's purchasing department determined that it can buy the same quality of electrical components from another supplier in the two remaining years of its contract with YIS at a price of $1,100 per set of electrical components. BSRV has informed YIS that either it has to match the price of the alternate supplier or it will buy the products from the other company.
The YIS response was that BSRV signed a three year legally binding contract that has two more years left on the contract and that YIS expects them to honor the agreement. Blue Sky management decided to walk away from the contract and to start buying electrical components from the new supplier. Yorktown Industrial Supply filed suit seeking unspecified damages from BSRV for breach of contract. Below are some additional facts and data:
YIS manufacturing, marketing, and shipping information:
Direct materials costs = $530 per unit
Direct labor costs = $140 per unit
Manufacturing overhead = $250 per unit (80% fixed cost)
Sales costs = $100 per unit (90% variable)
Shipping costs = $50 per unit (80% variable)
Even with the BSRV contract YIS is operating about 20 percent below its normal capacity
Blue Sky Recreational Vehicles response to the YIS lawsuit claimed that not only was the price of the electrical components packages cheaper from the new supplier, but they were of higher quality. Further BSRV in its pleadings to the court filed a claim asking the court for "relief from YIS's overcharging BSRV for electrical components by $100 per unit during the first year of the contract".
The most likely court response to Blue Sky's allegation that in year one of the contract it had been overcharged by $100 per unit for electronic components is
|
Construct new manufacturing facility
: Suppose your company needs to raise $10 million to construct a a new manufacturing facility. You are the Treasurer and have recommended to the CFO that the company raise $10 million by selling 30-year, $1,000 par value bonds with a coupon rate of 6% ..
|
|
Prepare the company contribution format income statement
: Colen Corporation produces and sells a single product. In January, the company sold 1, 700 units. Its total sales were $153,000, its total variable costs were $79, 900, and its total fixed costs were $56, 800. Prepare the company's contribution forma..
|
|
Cost of units transferred out-cost of wip ending inventory
: China Pacific manufactures a variety of natural fabrics for the clothing industry in a neighborhood of Shanghai. The following data pertain to the month of October 20X5. Calculate EU, cost per EU, cost of units transferred out, and cost of WIP ending..
|
|
What are the tax consequences-gain or loss
: Mark contributed $6000 cash to form a partnership as equal general partner, In 2016 the partnership sold for $5400 what are the tax consequences? Gain or Loss?
|
|
Multiyear supply agreements with its major customers
: Yorktown Industrial Supply Company (YIS) manufactures and sells electrical components used primarily by recreational vehicle manufacturers. Typically Yorktown has multiyear supply agreements with its major customers. Blue Sky Recreational Vehicles re..
|
|
Compute the federal income tax for poy corporation
: Compute the 2015 federal income tax for Poy Corporation, a C corporation. Revenues = 1,000,000 including 50,000 of dividends received from IBM stock, Expenses= 700,000 and dividends paid to shareholders= 150,000
|
|
Prepare journal entries for sunland to record the sale
: On March 10, 2017, Sunland Company sold to Barr Hardware 210 tool sets at a price of $54 each (cost $30 per set) with terms of n/60, f.o.b. shipping point. Sunland allows Barr to return any unused tool sets within 60 days of purchase. Prepare journa..
|
|
Compute the budgeted manufacturing costs of calvin company
: Solving for budgeted manufacturing costs. Calvin Company expects to sell 10 million cases of paper towels during the current year. Budgeted costs per case are $24 for direct materials, $18 for direct labor, and $6 (all variable) for manufacturing ove..
|
|
Your total annual yield on your investment
: One year ago you purchased 100 shares of Apple stock for $110.00 per share. During the year you were paid total dividends of $4 per share owned and today the stock is worth $112.00 per share. Your total annual yield on your investment is {number1]?
|