as follows: direct materials, $7.60; direct labor, $3.75; variable overhead, $9.

Question

as follows: direct materials, $7.60; direct labor, $3.75; variable overhead, $9.25; fixed overhead, $4.85; variable selling costs, $2.75; and fixed general and administrative costs, $6.75. Shoud Hadley Company accept the order? Special Order Decision Smith Accounting Services is considering a special order that it received from one of its corporate clients. The special order calls for Smith to prepare the individual tax returns of the corporation's four-largest shareholders. The company has idle capacity that could be used to complete the special order. The following data have been gathered about the preparation of individual tax returns: Smith Accounting Services would be satisfied with a $40 gross profit per return. Compute the minimum bid price for the entire order. Segment Profitability Decision Peruna Company is evaluating its two divisions, North Division and South Division. Data for North Division include sales of $530,000, variable costs of

Explanation / Answer

Smith Accounting Services Details Amt $ Special order details per return No of Pages Per return                        10 Cost Details per return Material cost @$1 per page =1*10=                        10 Labor cost @$60per hour for 4 hrs=                      240 Variable Overhead@$0.5 per page=                          5 Total relevant cost per return                      255 Required Gross Profit per return=                        40 Minimum Bid Price per return=255+40=                      295 Minimum Bid Price for 4 returns= $        1,180.00 As the company has idle capacity , the   Fixed overheads are not accounted for the special order.

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