The Immanuel Company has just obtained a request for a special order of 6,700 ji

Question

The Immanuel Company has just obtained a request for a special order of 6,700 jigs to be shipped at the end of the month at a selling price of $14 each. The company has a production capacity of 90,000 jigs per month with total fixed production costs of $144,000. At present, the company is selling 80,000 jigs per month through regular channels at a selling price of $25 each. For these regular sales, the cost for one jig is:
     

$4.50    

  
If the special order is accepted, Immanuel will not incur any selling expense; however, it will incur shipping costs of $0.30 per unit. Total fixed production cost would not be affected by this order.
  
Suppose that regular sales of jigs total 85,000 units per month. All other conditions remain the same. If Immanuel accepts the special order, the change in monthly net operating income will be (Do not round your intermediate calculations):

$48,910 increase

$21,450 decrease

$23,460 decrease

$23,440 increase

The Tingey Company has 500 obsolete microcomputers that are carried in inventory at a total cost of $760,000. If these microcomputers are upgraded at a total cost of $105,000, they can be sold for a total of $240,000. As an alternative, the microcomputers can be sold in their present condition for $52,000.

Suppose the selling price of the upgraded computers has not been set. At what selling price per unit would the company be as well off upgrading the computers as if it just sold the computers in their present condition? (Round your answer to one decimal place.)

$104.0

$812.0

$314.0

$220.40

The management of Rodarmel Corporation is considering dropping product G91Q. Data from the company's accounting system appear below:

    

        

All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $57,200 of the fixed manufacturing expenses and $40,200 of the fixed selling and administrative expenses are avoidable if product G91Q is discontinued.

    

What is the net operating income(loss) earned by product G91Q according to the company's accounting system? (Input the amount as a positive value.)

       

     

What would be the effect on the company's overall net operating income of dropping product G91Q? (Input the amount as a positive value.)

     

       

No

  Variable production cost $6.70       Fixed production cost $3.20       Variable selling expense

$4.50    

Explanation / Answer

The change in monthly net operating income will be decrease by $23,460

selling price per unit would the company be as well off upgrading the computers as if it just sold the computers in their present condition = 5200/500 = 104

Sales   398,000

Variable expenses 172,800

Fixed manufacturing expense 134,800

Fixed selling and administrative expenses 100,200

net operating income(loss) earned by product G91Q = 398000- 172800-134800-100200 = (9800)

the effect on the company's overall net operating income of dropping product G91Q=

The unavoidable fixed cost will continue to be incurr if product is dropped, cost to company even if product is dropped = 77600+ 60000 = 137600

Net operating income decrease by 137600,

No the product should not be dropped because cost of dropping product (i.e 137600) is higher than loss due to product (i.e 9800)

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.