answer in text form please (without image) 5. At present, Brackley Co.'s marketing and sales activities are only inOntario and western Quebec.A grocery chain in Manitoba has asked them to supply 50,000 piesper month at a price of $2 per pie. The marketing manager thinks that thecompany should refuse the contract because $2 is so far below its normalselling price of $3. The production manager thinks that the companyshould accept the order as there is spare capacity in the plant, and thevariable selling costs (delivery and commission) would not be incurred inrespect of this order.Required(a) Should Brackley Co. accept the order or not?(b) If Brackley Co. had no spare capacity in the plant, would theanswer be the same?(c)If Brackley Co.'s spare capacity is 25,000 pies per month, whatwould be the minimum selling price for Brackley Co. to accept theorder of 50,000 pies per month from the Manitoba grocery chain?

(a) To determine whether Brackley Co. should accept the order or not, we will perform a contribution…

Required (a) Should Brackley Co. accept the order or not? (b) If Brackley Co. had no spare capacity in the plant, would the answer be the same? (c) If Brackley Co.'s spare capacity is 25,000 pies per month, what would be the minimum selling price for Brackley Co. to accept the order of 50,000 pies per month from the Manitoba grocery chain?

Required (a) Should Brackley Co. accept the order or not? (b) If Brackley Co. had no spare capacity in the plant, would the answer be the same? (c) If Brackley Co.'s spare capacity is 25,000 pies per month, what would be the minimum selling price for Brackley Co. to accept the order of 50,000 pies per month from the Manitoba grocery chain?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter17: Activity Resource Usage Model And Tactical Decision Making

Section: Chapter Questions

Problem 8E: Feinan Sports, Inc., manufactures sporting equipment, including weight-lifting gloves. A national...

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Problem 7-18 Relevant Cost Analysis in a Variety of Situations [LO 7-2, LO 7-3, LO 7-4] Andretti Company has a single product called a Dak. The company normally produces and sells 81,000 Daks each year at a selling price of $46 per unit. The company's unit costs at this level of activity are given below: 2$ 11.00 1.90 5.00 ($405,000 total) 4.70 5.50 ($445,500 total) $ 35.60 Direct materials 7.50 Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses Total cost per unit A number of questions relating to the production and sale of Daks follow. Each question is independent.
would be no sales commissions on this order; thus, variable selling expenses would be slashed by 75%. However, Polaski Company would have to purchase a speclal machine to engrave the retail chain's name on the 7,000 units. This machine would cost $14,000. Polaski Company has no assurance that the retall chain will purchase additional units in the future. What is the financial advantage (disadvantage) of accepting the special order? (Round your intermediate calculations to 2 decimal places.) 2. Refer to the original data. Assume again that Polaski Company expects to sell only 39,000 Rets through regular channels next year. The U.S. Army would like to make a one-time-only purchase of 7,000 Rets. The Army would pay a fixed fee of $1.80 per Ret, and it would reimburse Polaskl Company for all costs of production (varlable and fixed) associated with the units. Because the army would pick up the Rets with its own trucks, there would be no variable selling expenses associated with this order.…
Feinan Sports, Inc., manufactures sporting equipment, including weight-lifting gloves. A national sporting goods chain recently submitted a special order for 4,600 pairs of weight-lifting gloves. Feinan Sports was not operating at capacity and could use the extra business. Unfortunately, the orders offering price of 12.80 per pair was below the cost to produce them. The controller was opposed to taking a loss on the deal. However, the personnel manager argued in favor of accepting the order even though a loss would be incurred; it would avoid the problem of layoffs and would help maintain the community image of the company. The full cost to produce a pair of weight-lifting gloves is presented below. No variable selling or administrative expenses would be associated with the order. Non-unit-level activity costs are a small percentage of total costs and are therefore not considered. Required: 1. Assume that the company would accept the order only if it increased total profits. Should the company accept or reject the order? Provide supporting computations. 2. Suppose that Feinan Sports has negotiated with the potential customer, and has determined that it can substitute cheaper materials, reducing direct materials cost by 0.95 per unit. In addition, the companys engineers have found a way to reduce direct labor cost by 0.50 per unit. Should the company accept or reject the order? Provide supporting computations. 3. Consider the personnel managers concerns. Discuss the merits of accepting the order even if it decreases total profits.
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Bert Asiago, a salesperson for Convertco, received an order from a potential new customer for 50,000 units of Convertco’s single product at a price $25 below its regular selling price of $65. Asiago knows that Convertco has the capacity to produce this order without affecting regular sales. He has spoken to Convertco’s controller, Bia Morgan, who has informed Asiago that at the $40 selling price, Convertco will not be covering its variable costs of $42 for the product, and she recommendsthe order not be accepted. Asiago knows that variable costs include his sales commission of $4 per unit. If he accepts a $2 per unit commission, the sale will produce a contribution margin of zero. Asiago is eager to get the new customer because he believes that this could lead to the new customer becoming a regular customer.
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Kindmart is an international retail store. Kindmart’s managers are considering implementing a new business-to-business (B2B) information system for processing merchandise orders. The current system costs Kindmart $2,000,000 per month and $55 per order. Kindmart has two options, a partially automated B2B and a fully automated B2B system. The partially automated B2B system will have a fixed cost of $6,000,000 per month and a variable cost of $45 per order. The fully automated B2B system has a fixed cost of $14,000,000 per month and a variable cost of $25 per order. Based on data from the past two years, Kindmart has determined the following distribution on monthly orders: Monthly Number of Orders Probability 300,000 0.25 500,000 0.45 700,000 0.30 Q3. In addition to the information system’s costs, what other factors should Kindmart consider before deciding to implement a…
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Ovation Company has a single product called a Bit. The company normally produces and sells 28,800 Bits each year at a selling price of $32 per unit. The company's unit costs at this level of activity are given below: Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses Total cost per unit $12.30 3.00 1.80 3.30 ($95,040 total) 2.10 3.00 ($86,400 total) $25.50 A number of questions relating to the production and sale of Bits follow. Each question is independent. Required. 1. Assume that Ovation Company has sufficient capacity to produce 43,200 Bits each year without any increase in fixed manufacturing overhead costs. The company could increase its sales by 25% above the current 28,800 units each year if it were willing to increase the fixed selling expenses by $60,000. a. Calculate the Incremental net operating income. Incremental operating income b. Would the Increased fixed selling expenses be…
Kindmart is an international retail store. Kindmart’s managers are considering implementing a new business-to-business (B2B) information system for processing merchandise orders. The current system costs Kindmart $2,000,000 per month and $55 per order. Kindmart has two options, a partially automated B2B and a fully automated B2B system. The partially automated B2B system will have a fixed cost of $6,000,000 per month and a variable cost of $45 per order. The fully automated B2B system has a fixed cost of $14,000,000 per month and a variable cost of $25 per order. Based on data from the past two years, Kindmart has determined the following distribution on monthly orders: Required: Prepare a table showing the cost of each plan for each quantity of monthly orders. What is the expected cost of each plan? In addition to the information system’s costs, what other factors should Kindmart consider before deciding to implement a new B2B system?
Kindmart is an international retail store. Kindmart’s managers are considering implementing a new business-to-business (B2B) information system for processing merchandise orders. The current system costs Kindmart $2,000,000 per month and $55 per order. Kindmart has two options, a partially automated B2B and a fully automated B2B system. The partially automated B2B system will have a fixed cost of $6,000,000 per month and a variable cost of $45 per order. The fully automated B2B system has a fixed cost of $14,000,000 per month and a variable cost of $25 per order. Based on data from the past two years, Kindmart has determined the following distribution on monthly orders: Monthly Number of Orders Probability 300,000 0.25 500,000 0.45 700,000 0.30 Q2. What is the expected cost of each plan?