Chapter 4 Fundamentals of Cost Analysis for Decision Making, Cost Accounting

Assignment Help:
31. Special Orders
Maria’s Food Service provides meals that nonprofi t organizations distribute to handicapped and
elderly people. Here is her forecasted income statement for April, when she expects to produce and
sell 3,000 meals:
Amount Per Unit
Sales revenue . . . . . . . . . . . . . . . . . . . . . . $18,000 $6.00
Costs of meals produced . . . . . . . . . . . . . 13,500 4.50
Gross profi t . . . . . . . . . . . . . . . . . . . . . . . . $ 4,500 $1.50
Administrative costs . . . . . . . . . . . . . . . . . 2,100 0.70
Operating profi t . . . . . . . . . . . . . . . . . . . $ 2,400 $0.80
Fixed costs included in this income statement are $4,500 for meal production and $600 for
administrative costs. Maria has received a special request from an organization sponsoring a picnic
to raise funds for the Special Olympics. This organization is willing to pay $3.50 per meal for
300 meals on April 10. Maria has suffi cient idle capacity to fi ll this special order. These meals will
incur all of the variable costs of meals produced, but variable administrative costs and total fi xed
costs will not be affected.
Required
a. What impact would accepting this special order have on operating profi t?
b. Should Maria accept the order?

Related Discussions:- Chapter 4 Fundamentals of Cost Analysis for Decision Making

Process accounts, What is the easiest of calculate equivalents before produ...

What is the easiest of calculate equivalents before producing a process account 2

Concept of cost, explain fully the concept of the cost.how does cost accoun...

explain fully the concept of the cost.how does cost accounting contribute to the effective and efficent management of an industrial established?

How much are your fixed costs, 1.    The following table summarizes the sho...

1.    The following table summarizes the short-run production function for your firm. Your product sells for $5 per unit, labor costs $5 per unit, and the rental price of capital i

What will be their allocated overhead?, Tyler's Consulting Company has purc...

Tyler's Consulting Company has purchased a new $15,000 copier. This overhead cost will be shared by the purchasing, accounting, and information technology departments since those a

Chapter 4 Fundamentals of Cost Analysis for Decision Making, 31. Special Or...

31. Special Orders Maria’s Food Service provides meals that nonprofi t organizations distribute to handicapped and elderly people. Here is her forecasted income statement for April

Analyzing direct material costs, You are reviewing a cost proposal, which i...

You are reviewing a cost proposal, which includes an $800,200 direct material estimate. After Initial examination of the proposal, you note that there are 500 material items, but y

Subsidiary ledgers and control accounts, Example B & B Mechanical Repai...

Example B & B Mechanical Repairs is a small, family owned partnership that specialises in the servicing and repair of motor vehicles. The business employs three qualified mecha

MANAGERIAL DECISION, DIFERENCE BETWEEN MARGINAL AND DIFFERENTIAL COSTING

DIFERENCE BETWEEN MARGINAL AND DIFFERENTIAL COSTING

Usefulness of variance analysis, Usefulness of Variance Analysis Caref...

Usefulness of Variance Analysis Carefully note that while prices are being charged to production, it can be done at the actual or standard price. For purposes of making varian

Write Your Message!

Captcha
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