Wilson Pharoah is a leading producer of vinyl replacement windows. The company's growth strategy focuses on
developing domestic markets in large metropolitan areas. The company operates a single manufacturing plant in
Kansas City with an annual capacity of 500,000 windows. Current production is budgeted at 450,000 windows per
year, a quantity that has been constant over the past three years. Based on the budget, the accounting department
has calculated the following unit costs for the windows:
Direct materials
$40.00
Direct labor
15.00
Manufacturing overhead
16.00
Selling and administrative
14.00
Total unit cost
$85.00
The company's budget includes $5,400,000 in fixed overhead and $3,150,000 in fixed selling and administrative
expenses. The windows sell for $150.00 each. A 2% distributor's commission is included in the selling and
administrative expenses.
Sheffield, Finland's second largest homebuilder, has approached Wilson with an offer to buy 75,000 windows
during the coming year. Given the size of the order, Sheffield has requested a 40% volume discount on Wilson's
normal selling price. The contribution lost from regular sales 25,000 units. Calculate the contribution from
special order. (If net contribution is negative, enter amount with a negative sign, e.g. -5,285 or parentheses, e.g. (5,285).
Round answer to 0 decimal places, e.g. 8,971.)
Net contribution from special order
$
Should Wilson grant Sheffield's request?
No
Return to the original data. Monk Builders has just signed a contract with the state government to replace the
windows in low-income housing units throughout the state. Monk needs 80,000 windows to complete the job
and has offered to buy them from Wilson at a price of $110.00 per window. Monk will pick up the windows at
Wilson's plant, so Wilson will not incur the $2 per window shipping charge. In addition, Wilson will not need to
pay a distributor's commission, since the windows will not be sold through a distributor.
Calculate the contribution from special order, contribution lost from regular sales and the net contribution from
special order.
Contribution from special order
Contribution lost from forgone regular sales
Net contribution from special order
$
$
$
