Suppose a customer wants to have its company logo affixed to each paperweight us

Question

Suppose a customer wants to have its company logo affixed to each paperweight using a label. Smooth Move would have to purchase a special logo labeling machine that will cost $12,000. The machine will be able to label the 15,000 units and then it will be scrapped (with no further value). No other fixed overhead activities will be incurred. In addition, each special logo requires additional direct materials of $0.20.

Required:

By how much will profit increase or decrease if the order is accepted? If your answer is decrease, enter negative value.

$

Sell or Process Further, Basic Analysis

The revenues from each product are as follows: Alpha, $100,000; Beta, $93,000; Gamma, $30,000; and Delta, $40,000.

Management is considering processing Delta beyond the split-off point, which would increase the sales value of Delta to $75,000. However, to process Delta further means that the company must rent some special equipment that costs $15,400 per quarter. Additional materials and labor also needed will cost $8,500 per quarter.

Required:

1. What is the operating profit earned by the four products for one quarter?
$

2.  Gross profit would be $ .

Explanation / Answer

Suppose a customer wants to have its company logo affixed to each paperweight us

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