0. Analyzing a Special-Order Decision Woodchuck Corp. makes several varicties of
ID: 2526982 • Letter: 0
Question
0. Analyzing a Special-Order Decision Woodchuck Corp. makes several varicties of wooden fiumiture. It has been approached about producing a special order for The senior citizens have offered to buy 80 of the Rock-On model chairs at a price of $70 cach. Woodchuck currerly has the excess capacity necessary to accept the offer. A summary of the infomation related to production of Woodchucks Rock-On model follows. Direct materials Direct labor Variable manufacturing Fixed manufacturing overhead Total cost Regular sales price $30 20 12 Sis $99 Required: 1. What impact would this special order have on Woodchuck's total profit? 2. Should Woodchuck accept the special order? 3. Suppose that the special offer had been to purchase 100 rocking chairs for S65 cach. What effect would that offer have on Woodchuck's total profit?Explanation / Answer
1) Incremental analysis ;
Total profit increase by 640
2) Woodchuck should accept the special order
3) Incremental analysis ;
Total profit increase by $300
Incremental revenue (80*70) 5600 Incremental cost Direct material (80*30) -2400 Direct labour (80*20) -1600 Variable manufacturing overhead (80*12) -960 Total incremental cost -4960 Incremental profit (loss) 640Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.