1. R&W Manufacturing Company produces men’s hiker shorts. The selling price of t
ID: 2497152 • Letter: 1
Question
1.
R&W Manufacturing Company produces men’s hiker shorts. The selling price of the shorts is $35. The following standard cost data per unit includes $7 direct material, $4 direct labor and $12 manufacturing overhead (50% variable, 50% fixed). R&W has received a special order for 200 at a price of $20 each. The only additional cost of accepting the special order is a sales commission of $1 per unit. R&W has ample capacity to produce the special order without interrupting regular production. Ignoring qualitative factors, should R&W accept the special order?
2.
Bivouac Camping Supply sells harsh weather tents. The company has the following income statement.
Required:
What is the contribution margin per unit?
What is the contribution margin ratio?
What is the breakeven point in units? In sales dollars?
What is the margin of safety in units? In dollars?
Sales ($1,000 per unit) $200,000 Less Cost of Goods sold ($475 per unit) 95,000 Gross margin 105,000 Less Operating costs Salaries $40,000 Advertising 10,000 Sales commissions ($5 per unit) 1,000 Shipping ($20 per unit) 4,000 55,000 Operating income $ 50,000Explanation / Answer
1. R&W Manufacturing Company produces men’s hiker shorts. The selling price of t
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