What would be the minimum acceptable unit price for GEM

Assignment Help Accounting Basics
Reference no: EM132716959

Question - GEM Limited has a single product Flicks. The company normally produces and sells 80,000 units of Flicks each year at a price of $240 per unit. The company's unit costs at this level of activity are as follow:

Direct material

$57.00

Direct labour

60.00

Variable manufacturing overhead

16.80

Fixed manufacturing overhead

30.00

Variable selling and administrative costs

10.20

Fixed selling and administrative costs

27.00

Total unit cost

$201.00

GEM has sufficient capacity to produce 100 000 units of Flicks a year without any increase in fixed manufacturing overhead.

Required -

(a) GEM has an opportunity to sell 10 000 units to an overseas customer. Import duties and other special costs associated with this order would total $42 000. The only selling costs that would be associated with the order would be a shipping cost of $9.00 per unit. What would be the minimum acceptable unit price for GEM to consider this order?

(b) The company has 200 units of Flicks on hand that were produced two months ago. Due to blemishes on the units, it will be impossible to sell these units at the normal price. If the company wishes to sell them through regular sales channels, what would be the relevant cost for setting the minimum price? Explain.

(c) "All future costs are relevant in decision making." Do you agree? Explain.

Reference no: EM132716959

Questions Cloud

Developing a sociological perspective : Developing a sociological perspective requires looking beyond surface explanations for social phenomena, it requires sociological imagination.
Develop new information security policy : If you were asked by your employer to develop a new Information Security Policy, where would you turn to find resources to build this policy?
What is cost per unit for tewkesbury manufacturing company : During June, Tewkesbury Manufacturing Company incurred, Assuming the rework is attributable to internal failure due to an employee error, the cost per unit is
Define what is the balance in retained earnings : Based on the following data and assuming that the common stock account balance is $51000, what is the balance in retained earnings?
What would be the minimum acceptable unit price for GEM : The order would be a shipping cost of $9.00 per unit. What would be the minimum acceptable unit price for GEM to consider this order
Calculate the interest rate of diana : Diana usually uses a three-year payback period to determine if a project is acceptable. A recent project with uniform yearly savings over a five-year life had.
Identify possible contingent liabilities : To identify possible contingent liabilities, the auditor usually will? consider whether information obtained in other audit areas indicate the possibility
Profit & loss statement and balance sheet : What are the primary distinctions between a Profit & Loss Statement and Balance Sheet - What items will the accountant need to create a 12-month Income
Differentiate a traditional leader from a servant leader : What is a servant Leadership in your own understanding? Differentiate a traditional leader from a servant leader.

Reviews

Write a Review

Accounting Basics Questions & Answers

  The accountancy profession be in relation to audit reform

What should the role of the accountancy profession be in relation to audit reform. What are the tensions around this

  Calculate the amount of allocated manufacturing overhead

Budgeted Direct-labor hours 20,000. If 21,000 direct labor hours are used, calculate the amount of allocated manufacturing overhead

  Salt co is considering investing in a new facility to

salt co. is considering investing in a new facility to extract and produce salt. the facility will increase revenues by

  Gross earnings subject to fica taxes total

Ullman Company's payroll taxes are: FICA 8%, state unemployment 2.5% (due to a stable employment record), and 0.8% federal unemployment. Gross earnings subject to FICA taxes total $370,000, and gross earnings subject to unemployment taxes total $90,0..

  What is the book value of the equipment at the year end

What is the book value of the equipment at the end of 2008 under each method? Compute the depreciation expense for the years 2008 through 2010, using the straight-line method.

  Partnerships and consolidations

What are the issues related to goodwill valuation when comparing partnerships formation with companies consolidations?

  What is the annual schedule adjustment for each year

What is the annual Schedule M1(M3) adjustment for each year during the first 15 years of the amortization period

  Calculate two overhead rates the first uses machine minutes

hurst mats manufactures custom replacement floor mats for automobiles. the floor mats are made of spun nylon on highly

  Find what is the expected return on the share

Beta of 1.2. The risk-free rate of return is 2.0% and the expected return on the market is 11.9%. What is the expected return on the share?

  Summarize the total drying and packaging department costs

Using the weighted-averages method, summarize the total Drying and Packaging department costs for week 37, and assign total costs to units completed

  Do you think evan actions were justified

Do you think Evan actions were justified? What internal control activities could the fraternity have implemented in order to prevent Evan actions?

  Special or common-cause variation

Roulette. An observer at the roulette wheel in Monte Carlo notices that there seems to be no pattern to the num- bers that come up during an entire evening. Is this an ex- ample of special- or common-cause variation? Explain.

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