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Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 86,400 units per year is Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $1.50 $ 2.00 $0.90 $ 5.15 $ 1.10 $1.00 The normal selling price is $20.00 per unit. The company's capacity is 102.000 units per year. An order has been received from a mail- order house for 1,300 units at a special price of $17.00 per unit. This order would not affect regular sales or total fixed costs. Required: 1. What is the financial advantage (disadvantage) of accepting the special order? 2. As a separate matter from the special order, assume the company's inventory includes 1,000 units that are inferior quality. The units must be sold through regular channels at a reduced price. The company does not expect the selling of these inferior units to affect regular sales. What unit cost is relevant for establishing a minimum selling price for the inferior units? Complete this question by entering your answers in the tabs below. Required 1 Required 2

Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 86,400 units per year is Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $1.50 $ 2.00 $0.90 $ 5.15 $ 1.10 $1.00 The normal selling price is $20.00 per unit. The company's capacity is 102.000 units per year. An order has been received from a mail- order house for 1,300 units at a special price of $17.00 per unit. This order would not affect regular sales or total fixed costs. Required: 1. What is the financial advantage (disadvantage) of accepting the special order? 2. As a separate matter from the special order, assume the company's inventory includes 1,000 units that are inferior quality. The units must be sold through regular channels at a reduced price. The company does not expect the selling of these inferior units to affect regular sales. What unit cost is relevant for establishing a minimum selling price for the inferior units? Complete this question by entering your answers in the tabs below. Required 1 Required 2

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 86,400 units per year is Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses The normal selling price is $20.00 per unit. The company's capacity is 102.000 units per year. An order has been received from a mail- order house for 1,300 units at a special price of $17.00 per unit. This order would not affect regular sales or total fixed costs. Required: 1. What is the financial advantage (disadvantage) of accepting the special order? 2. As a separate matter from the special order, assume the company's inventory includes 1,000 units that are inferior quality. The units must be sold through regular channels at a reduced price. The company does not expect the selling of these inferior units to affect regular sales. What unit cost is relevant for establishing a minimum selling price for the inferior units? Complete this question by entering your answers in the tabs below. Required 1 $1.50 $2.00 $0.90 $ 5.15 $1.10 $1.00 Required 2 As a separate matter from the special order, assume the company's inventory includes 1,000 units that are inferior quality. The units must be sold through regular channels at a reduced price. The company does not expect the selling of these inferior units to affect regular sales. What unit cost is relevant for establishing a minimum selling price for the inferior units? Note: Round your answer to 2 decimal places. Relevant cost per unit Show less A
Transcribed Image Text:Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 86,400 units per year is Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses The normal selling price is $20.00 per unit. The company's capacity is 102.000 units per year. An order has been received from a mail- order house for 1,300 units at a special price of $17.00 per unit. This order would not affect regular sales or total fixed costs. Required: 1. What is the financial advantage (disadvantage) of accepting the special order? 2. As a separate matter from the special order, assume the company's inventory includes 1,000 units that are inferior quality. The units must be sold through regular channels at a reduced price. The company does not expect the selling of these inferior units to affect regular sales. What unit cost is relevant for establishing a minimum selling price for the inferior units? Complete this question by entering your answers in the tabs below. Required 1 $1.50 $2.00 $0.90 $ 5.15 $1.10 $1.00 Required 2 As a separate matter from the special order, assume the company's inventory includes 1,000 units that are inferior quality. The units must be sold through regular channels at a reduced price. The company does not expect the selling of these inferior units to affect regular sales. What unit cost is relevant for establishing a minimum selling price for the inferior units? Note: Round your answer to 2 decimal places. Relevant cost per unit Show less A
Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 86,400 units per year is: Direct materials Direct labor. Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $1.50 $ 2.00 $0.90 $ 5.15 $1.10 $ 1.00 The normal selling price is $20.00 per unit. The company's capacity is 102,000 units per year. An order has been received from a mail- order house for 1,300 units at a special price of $1700 per unit. This order would not affect regular sales or total fixed costs. Required: 1. What is the financial advantage (disadvantage) of accepting the special order? 2. As a separate matter from the special order, sume the company's inventory includes 1,000 units that are inferior quality. The units must be sold through regular channels at a reduced price. The company does not expect the selling of these inferior units to affect regular sales. What unit cost is relevant for establishing a minimum selling price for the inferior units? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the financial advantage (disadvantage) of accepting the special order? Required 1 Required 2 >
Transcribed Image Text:Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 86,400 units per year is: Direct materials Direct labor. Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $1.50 $ 2.00 $0.90 $ 5.15 $1.10 $ 1.00 The normal selling price is $20.00 per unit. The company's capacity is 102,000 units per year. An order has been received from a mail- order house for 1,300 units at a special price of $1700 per unit. This order would not affect regular sales or total fixed costs. Required: 1. What is the financial advantage (disadvantage) of accepting the special order? 2. As a separate matter from the special order, sume the company's inventory includes 1,000 units that are inferior quality. The units must be sold through regular channels at a reduced price. The company does not expect the selling of these inferior units to affect regular sales. What unit cost is relevant for establishing a minimum selling price for the inferior units? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the financial advantage (disadvantage) of accepting the special order? Required 1 Required 2 >
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