TestFINAL 334 PC 2017-Word Mailings Review View Grammarly Foxit PDF Tell me what

Question

TestFINAL 334 PC 2017-Word Mailings Review View Grammarly Foxit PDF Tell me what you want to do AaBbCcl AaBbCc AaBbCcl AaBbCel AaBbCcl :5- 2.B-11 Heading 1 1Heading 2 Heading 3 Heading 4 THeading References ·A- Styles Paragraph - Special Pricing Decisions: Sinatra Company makes rubber ducks. It costs $0.25 in variable costs for each duck and they sell them for $1.50 each. Monthly fixed costs are $200,000. Normally Sinatra produces and sells 250,000 ducks per month. They believe strongly in JIT, there never is any inventory. Dino Ltd. Has asked Sinatra if it would supply 100,000 special rubber doggies for its new line of gifts. Dino is willing to pay $3.00 per rubber doggie. Sinatra figures that it will cost $2.50 to supply the doggies, plus they will have to pay a 5 cent per doggie sold environmental fee. They would have to pay $20,000 to adapt existing production equipment to handle doggies. This is a one-time order, and will have no effect on their current duck business. Required Show whether Sinatra should accept or reject the Dino order. Include how much extra money Sinatra would make (or lose) if they took the order 1. 2. Let's say Sinatro's production capacity was for 300,000 total pieces, ducks, doggies, or combination of both, but only a maximum of 300,000 pieces total. If Dino insists that the order for 100,000 doggies be filled completely (all 100,000 doggies), should Sinatra take the order in this case?

Explanation / Answer

Answer 1. Statement of Incremental Profit If Special Order is Accepted - 100,000 Doggies Incremental Revenue Sales Revenue - 100,000 nos X $3          300,000 Incremental Costs Cost of Doggies - 100,000 nos X $2.50          250,000 Environmental Fees - 100,000 nos X $0.05              5,000 Fixed Overhead            20,000          275,000 Net Incremental Profit (Loss)            25,000 Answer 2. Statement of Incremental Profit If Special Order is Accepted - 100,000 Doggies Incremental Revenue Sales Revenue - 100,000 nos X $3          300,000 Incremental Costs Cost of Doggies - 100,000 nos X $2.50          250,000 Environmental Fees - 100,000 nos X $0.05              5,000 Fixed Overhead            20,000 Loss of Ccontribution - Ducks - 50,000 Nos X $1.25            62,500          337,500 Net Incremental Profit (Loss)          (37,500) Contribution per Duck = $1.50 - $0.25 = $1.25 per Duck

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