Project #30314 - Accounting

PROBLEM #1 SPECIAL ORDER

Parker and Spitzer Manufacturing is approached by a European customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. The following per unit data apply for sales to regular customers:

 

            Direct materials                             $66

            Direct labor                                     30

            Variable manufacturing support     48

            Fixed manufacturing support        104

                  Total manufacturing costs       248

            Markup (50%)                               124

            Targeted selling price                  $372

 

Parker and Spitzer Manufacturing has excess capacity.

 

Required:

a.   What is the full cost of the product per unit?

b.   What is the contribution margin per unit?

c.   Which costs are relevant for making the decision regarding this one-time-only special order? Why?

d.   For Parker and Spitzer Manufacturing, what is the minimum acceptable price of this one-time-only special order?

 

e.   For this one-time-only special order, should Parker and Spitzer Manufacturing consider a price of $200 per unit? Why or why not?

 PROBLEM #2  SCARCE RESOURCES

25) Ralph's Mufflers manufactures three different product lines, Model X, Model Y, and Model Z. Considerable market demand exists for all models. The following per unit data apply:

                                                                    Model X   Model Y   Model Z

Selling price                                                  $160          $180          $200

Direct materials                                                 60              60              60

Direct labor ($20 per hour)                               30              30              40

Variable support costs ($10 per machine-hour) 10              20              20

Fixed support costs                                           40              40              40

 

a.   For each model, compute the contribution margin per unit.

b.   For each model, compute the contribution margin per machine-hour.

c.   If there is excess capacity, which model is the most profitable to produce? Why?

d.   If there is a machine breakdown, which model is the most profitable to produce? Why?

e.   How can Ralph encourage her sales people to promote the more profitable model?

 

 

Subject Business
Due By (Pacific Time) 05/08/2014 01:00 pm
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