WeBWorK:Combs ACCTG 211-Introduction to Financial and Managerial Accounting: ACC

Question

WeBWorK:Combs ACCTG 211-Introduction to Financial and Managerial Accounting: ACCTG 21 ACCOUNTING r16-HW #1 201 ric nstuct Question 2 (of 6) Seve & E value 10.00 points Exercise 16-12 Accept special sales order? LO 2,3 SureLock Manufacturing Co. makes and sells several models of locks. The cost records for the ZForce lock show that manufactuning costs total $21.00 per lock An analss of s amount indicates that $12.18 of the total cost has a variable cost behavior pattern, and the remainder is an allocation of fixed manufactuning overheat The nomal selingpnce of h model is $31.00 per lock. A chain store has offered to buy 15,000 ZForce locks from Surelock at a price of $14.70 each to sell in a market that would not compete with Surelooks regular business. SureLock has manufacturing capacity available and could make these locks without incurring additional fixed manufacturing overthead Required: a. Calculate the effect on SureLock's operating income of accepting the order from the operating income O Type here to search XFA

Explanation / Answer

Price offered by Chain store = $14.7

Relevant variable cost of manufacturing = $12.18

Per unit Incremental Profit = 14.7 - 12.18

Increase in Operating Income $37,800. (14.7-12.18)*15000

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