Ducky Corporation makes rubber duckie\'s. Floating Toys Inc has approached Ducky

Question

Ducky Corporation makes rubber duckie's. Floating Toys Inc has approached Ducky Corp with a proposal to buy 1,000 duckie's for $4,000. Ducky has can easily fill the order without jeopardizing current business. The following costs are associated annually with duckie's when 5,000 units are produced: Direct material $10,500 $2.10 each Direct labor 6,500 $1.30 Manufacturing OH 4,500 (40% variable 60% fixed) All fixed overhead is allocated equally to all products produced. Prepare an incremental analysis to analyze whether Ducky should accept the order from Floating Toys Inc.

Explanation / Answer

Incremental Revenue $4,000 Incremental Cost Direct material (1000*2.10) 2100 Direct Labor (1000*1.30) 1300 manufacturing Overhead ((4500*40%)/5000)*1000 360 Total Incremental cost 3760 Incremental Profit 240 Then Ducky should accept the order because it is profitable

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

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