George Jack a. calculate the following costs related to the 5,000 unit custom order. 1. calculate differential cost of the order 2. the full cost of the order. 3. the opportunity cost of taking the order
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Green Grow Inc. (GGI) manufactures lawn fertilizer. Because of the product's very high quality, GGI often receives special orders from agricultural research groups. For each type of fertilizer sold, each bag is carefully filled to have the precise mix of components advertised for that type of fertilizer. GGI's operating capacity is 41,000 one-hundred-pound bags per month, and it currently is selling 39,000 bags manufactured in 39 batches of 1,000 bags each. The firm just received a request for a special order of 8,800 one-hundred-pound bags of fertilizer for $260,000 from APAC, a research organization. The production costs would be the same, but there would be no variable selling costs. Delivery and other packaging and distribution services would cause a one-time $6,000 cost for GGI. The special order would be processed in two batches of 4,400 bags each. (No incremental batch-level costs are anticipated. Most of the batch-level costs in this case are short-term fixed costs, such as salaries and depreciation.) The following information is provided about GGI's current operations: Sales and production cost data for 39,000 bags, per bag: Sales price $46 Variable manufacturing costs $19 Variable selling costs $2 Fixed manufacturing costs $20 Fixed marketing costs $3 No marketing costs would be associated with the special order. Because the order would be used in research and consistency is critical, APAC requires that GGI fill the entire order of 8,800 bags. Required: 1. What is the total relevant cost of filling this special sales order? 2. What would be the change in operating income if the special order is accepted? 3. What is the break-even selling price per unit for the special sales order (i.e., what is the selling price that would result in a zero effect on operating income)? 4. Prepare comparative income statements, using the contribution format, for both the current situation and assuming the special order is accepted at the break-even price determined in requirement 3.
Akash M.
1. (3 Points) Jack has opened his own catering business. His revenue in the first year is $186,000. He paid $41,000 to buy a delivery truck, which depreciated by $6000 in the first year. He paid $14,000 for gas and $2500 for insurance. Prior to starting the business Jack had owned a cafe. With the cafe he had made an annual accounting profit of $121,000. He sold the cafe for $280,000. He used part of the money from the sale to buy the delivery truck and put the rest in the bank where it now earns 3% interest annually. Calculate Jack’s accounting and economic profit. Is he better off or worse off with the catering business? Explain briefly. a. Accounting Profit:___________________________________ b. Economic Profit:________
Jennifer S.
Sweet Wave Bakery normally produces sourdough bread on a regular basis. It sells approximately 35,000 of this type of bread each year at $3.90 per loaf. The variable costs for each loaf of bread are $2.30. Sunshine Bakery in Miami has not been able to produce enough sourdough bread loaves to meet customer demands. They would like to purchase 15,000 loaves for $2.60 per loaf. Sweet Wave's sourdough bread line is near full capacity. In order to accept the order from Sunshine, Sweet Wave would have to temporarily add a 3rd shift to their sourdough line. This would increase the variable manufacturing costs by $0.30 per loaf but variable selling costs would decrease by $0.20 per loaf. A restaurant has requested to purchase a special order of the sourdough bread. They are requesting 2,000 loaves. Sweet Wave has the capacity for this order without adding the additional shift. The restaurant is willing to pay $3.10 per loaf of bread. Instructions A. Given the information above: What are the consequences of Sweet Wave agreeing to provide the 15,000 units to Sunshine Bakery? Would this be a wise "special order" to accept? Net Income Increase/Decrease 0 0 0 Accept Order Reject Order Revenue Cost Net Income 0 0 Should Sweet Wave accept the special order? Instructions B. Should Sweet Wave accept the special order from the restaurant? Net Income Increase/Decrease 0 0 0 Accept Order Reject Order Revenue Cost Net Income 0 0 Should Sweet Wave accept the special order from the restaurant?
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Cost Accounting A Managerial Emphasis
Principles of Accounting Volume 1: Financial Accounting
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