1A : A customer has requested that Lewelling Corporation fill a special order fo

Question

1A: A customer has requested that Lewelling Corporation fill a special order for 2,200 units of product S47 for $38 a unit. While the product would be modified slightly for the special order, product S47's normal unit product cost is $16.90:

Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product S47 that would increase the variable costs by $1.90 per unit and that would require an investment of $16,000.00 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. The annual financial advantage (disadvantage) for the company as a result of accepting this special order should be:

Multiple Choice

$40,760

($15,700)

$16,200

($2,000)

1B: An automated turning machine is the current constraint at Jordison Corporation. Three products use this constrained resource. Data concerning those products appear below:

Rank the products in order of their current profitability from most profitable to least profitable. In other words, rank the products in the order in which they should be emphasized. (Round your intermediate calculations to 2 decimal places.)

Multiple Choice

LN, JQ, RQ

RQ, LN, JQ

RQ, JQ, LN

JQ, RQ, LN

Direct materials $ 4.60 Direct labor $ 4.00 Variable manufacturing overhead $ 1.70 Fixed manufacturing overhead $ 6.60 Unit product cost $ 16.90

Explanation / Answer

1) Contribution on special order Selling price 38 less:Variable cost direct materials 4.6 Direct labor 4 Variable oh (1.70+1.90) 3.6 total variable cost 12.2 Contribution per unit 25.8 total contribution on special order 2200*25.8= 56760 less special molds -16,000 Net financial advantage 40760 answer 2) LN JQ RQ Selling price per unit 161.88 350.41 446.71 less Variable cost per unit -116.12 -279.11 -338.71 contribution per unit 45.76 71.3 108 minutes 2.6 4.6 7.5 contribution per minute 17.6 15.5 14.4 Ranking 1 2 3 answer LN,JQ,RQ

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