1. At the end of the year, a company offered to buy 4,180 units of a product fro
ID: 2453284 • Letter: 1
Question
1. At the end of the year, a company offered to buy 4,180 units of a product from X Company for a special price of $11.00 each instead of the company's regular price of $18.00 each. The following information relates to the 60,300 units of the product that X Company has already made and sold to its regular customers:B)The marketing manager thinks that if X Company accepts the special order, regular customers will be lost, with demand falling by 800 units. The effect of this loss of sales will be to decrease firm profits by....?
2. The following information is for X Company's two products, A and B:
3. X Company currently buys 7,500 units of a component part each year from a supplier for $8.70 each, but it is considering making the part instead. In order to make the part, X Company will have to buy equipment that will cost $150,000. The equipment will last for six years, at which time it will have zero disposal value. X Company estimates that it will cost $36,635 a year to make the 7,500 units. What is the approximate rate of return if X Company makes the part instead of buying it from the supplier?
Present value table if needed
Total Per-Unit Revenue $1,085,400 $18.00 Cost of Goods Sold Variable 375,066 6.22 Fixed 134,469 2.23 Selling and Administrative Costs Variable 84,420 1.40 Fixed 90,450 1.50 Profit $400,995 $6.65
Explanation / Answer
As per Chegg Guidelines we answer one question per post. I have answered all parts of 1 question. Kindly post remaining questions in separate post to get the best answers Statement showing evaluation of special Order Particulars Amount Sales Revenue =4180 *11 45,980.00 Variable COGS = 4180*6.22 25,999.60 Additional Mat Cost = 4180*.87 3,636.60 Rental of Special Equipment 3,000.00 Income = Sales - Costs 13,343.80 Note: Fixed Costs remain unaffected by the order Variable selling costs are ignored since this is special order Particulars Amount Sales Revenue Lost =800*18 14,400.00 Variable COGS = 800*6.22 4,976.00 Variable selling and Admin = 800*1.40 1,120.00 Reduction in firms Profits due to loss of sales 8,304.00 Net Gain = 13343.80 - 8304 = $5039.80
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