What unit cost is relevant for establishing minimum selling

Assignment Help Managerial Accounting
Reference no: EM132535951

Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 91,200 units per year is:

Direct materials $2.50

Direct labor $3.00

Variable manufacturing overhead $0.80

Fixed manufacturing overhead $3.65

Variable selling and administrative expenses $2.00

Fixed selling and administrative expenses $2.00

  • The normal selling price is $23.00 per unit. The company's capacity is 121,200 units per year. An order has been received from a mail-order house for 2,500 units at a special price of $20.00 per unit. This order would not affect regular sales or the company's total fixed costs.

Required:

Question 1. What is the financial advantage (disadvantage) of accepting the special order?

Question 2. As a separate matter from the special order, assume the company's inventory includes 1,000 units of this product that were produced last year and that are inferior to the current model. The units must be sold through regular channels at reduced prices. The company does not expect the selling of these inferior units to have any effect on the sales of its current model. What unit cost is relevant for establishing a minimum selling price for these units?

Reference no: EM132535951

Questions Cloud

Identified as organizational goal to be recognized : Identified as an organizational goal to be recognized for achieving the Baldrige Healthcare Criteria for Performance Excellence.
What can do to prevent something like from happening : What can you do to prevent something like this from happening? your company proposal has been evaluated by the procurement office on past performance.
Motion on a very large : A momentary force is applied to an object to set it in motion on a very large, friction-less surface. Once it is in motion, and after some time has passed
The behavior of costs in companies : This discussion is designed to get you to see the behavior of costs in companies with which they are familiar. You should identify and describe the company.
What unit cost is relevant for establishing minimum selling : Inferior units to have any effect on the sales of its current model. What unit cost is relevant for establishing a minimum selling price for these units?
Moment in your life when you experienced miscommunication : Identify a moment in your life when you experienced miscommunication. Describe it. Where were you? Who were you with? What were you discussing
What is financial disadvantage of discontinuing the linens : Bed & Bath, a retailing company, has two departments,What is the financial advantage (disadvantage) of discontinuing the Linens Department?
How many photons are emitted each second : How many photons are emitted each second by an FM radio station whose transmitted power is 200kW and whose frequency is 90.9MHz?
Identify and describe the four stages of learning : Answer these question with chapter provided: Identify and describe the four stages of learning. Which stage do you believe is the most difficult.

Reviews

Write a Review

Managerial Accounting Questions & Answers

  Manage budgets and financial plans

Explain the budgeting process and its importance to a business, identifying the components of different budgets, forecast estimates for inclusion in the budgets.

  Prepare a retained earnings statement

Prepare a retained earnings statement for the year and Prepare a stockholders' equity section of given case.

  Prepare a master budget for the three-month period

Prepare a master budget for the three-month period.

  Construct the companys direct labor budget

Construct the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced.

  Evaluate the predetermined overhead rate

Evaluate the Predetermined Overhead Rate

  Determine the company''s bid

Determine the company's bid if activity-based costing is used and the bid is based upon full manufacturing cost plus 30 percent.

  Compute the pool rates for the different activities

Complete the schedule to compute the pool rates for the different activities.

  Prepare Company financial statements

Prepare Company financial statements

  Prepare an analysis of terracycles

This individual assignment is based on the TerraCycle Inc.

  Discuss the ethical issues

Discuss the ethical issues

  Political resources in emerging markets

Calculate the GDP in Income Approach  and Expenditure Approach

  Management accounting - ehsan electronics company

A new plant accountant suggested that the company may be able to assign support costs to products more accurately by using an activity based costing system that relies on a separate rate for each manufacturing activity that causes support costs.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd