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Cost Management 6th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins
Edition 6ISBN: 978-0078025532Cost Management 6th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins
Edition 6ISBN: 978-0078025532 Exercise 41
Special Order Alton Inc. is working at full production capacity producing 20,000 units of a unique product. Manufacturing costs per unit for the product are
The unit manufacturing overhead cost is based on a $4 variable cost per unit and $120,000 fixed costs. The nonmanufacturing costs, all variable, are $8 per unit, and the sales price is $45 per unit.
Sports Headquarters Company (SHC) has asked Alton to produce 5,000 units of a modification of the new product. This modification would require the same manufacturing processes. SHC has offered to share the nonmanufacturing costs equally with Alton. Alton would sell the modified product to SHC for $35 per unit.
Required Set up an Excel spreadsheet to answer the following questions.
1. Should Alton produce the special order for SHC Why or why not
2. Suppose that Alton Inc. had been working at less than full capacity to produce 16,000 units of the product when SHC made the offer. What is the minimum price that Alton should accept for the modified product under these conditions Explain.
3. Use Goal Seek to determine the minimum price that Alton should accept for the special sales order.
The unit manufacturing overhead cost is based on a $4 variable cost per unit and $120,000 fixed costs. The nonmanufacturing costs, all variable, are $8 per unit, and the sales price is $45 per unit.
Sports Headquarters Company (SHC) has asked Alton to produce 5,000 units of a modification of the new product. This modification would require the same manufacturing processes. SHC has offered to share the nonmanufacturing costs equally with Alton. Alton would sell the modified product to SHC for $35 per unit.
Required Set up an Excel spreadsheet to answer the following questions.
1. Should Alton produce the special order for SHC Why or why not
2. Suppose that Alton Inc. had been working at less than full capacity to produce 16,000 units of the product when SHC made the offer. What is the minimum price that Alton should accept for the modified product under these conditions Explain.
3. Use Goal Seek to determine the minimum price that Alton should accept for the special sales order.
Explanation
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Verified
Answer Sub Part (1)
A should accept the...
Cost Management 6th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins
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