Grant’s Kitchens is approached by Ms. Tammy Wang, a new customer, to fulfill a large one-time-only special order for a product similar to one offered to regular customers. The following per unit data apply for sales to regular customers:
Variable manufacturing support
Fixed manufacturing support
Total manufacturing costs
Targeted selling price
Grant’s Kitchens has excess capacity. Ms. Wang wants the cabinets in cherry rather than oak, so direct material costs will increase by $30 per unit.
For Grant’s Kitchens, what is the minimum acceptable price of this one-time-only special order?
$455 + $300 + $45 + $30 = $830
Other than price, what other items should Grant’s Kitchens consider before accepting this one-time-only special order?
Reaction of shareholders
Reaction of existing customers to the lower price offered to Ms. Wang
Demand for cherry cabinets
Price is the only consideration.
If Ms. Wang wanted a long-term commitment for supplying this product, this analysis
would definitely be different.
may be different.
would not be different.
does not contain enough information to determine if there would be a difference.
If there was limited capacity, all of the following amounts would change EXCEPT
the minimum acceptable price.
THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 48 THROUGH 51. White Corporation manufactures football jerseys and uses budgeted machine-hours to allocate variable manufacturing overhead. The following information pertains to the company's manufacturing overhead data.
Budgeted output units
Budgeted variable manufacturing overhead costs for 20,000 units
Actual output units produced
Actual machine-hours used
Actual variable manufacturing overhead costs
What is the budgeted variable overhead cost rate per output unit?
$360,000/20,000 = $18.00
What is the flexible-budget amount for variable manufacturing overhead?
none of the above
18,000 x ($360,000/20,000)] = $324,000
What is the flexible-budget variance for variable manufacturing overhead?
none of the above
$342,000 – [18,000 x ($360,000/20,000)] = $18,000 unfavorable
Variable-manufacturing overhead costs were __________ for actual output.
higher than expected
the same as expected
lower than expected
unable to be determined
THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 57 AND 58.
Kellar Corporation manufactured 1,500 chairs during June. The following variable overhead data pertain to June.
Budgeted variable overhead cost per unit
Actual variable manufacturing overhead cost
Flexible-budget amount for variable manufacturing overhead
Variable manufacturing overhead efficiency variance
What is the variable overhead flexible-budget variance?
$16,800 - $18,000 = $1,200 (F)
What is the variable overhead spending variance?
$1200 (F) - $360 (U) = $1,560 (F)
THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 39 THROUGH 42. Yakima Manufacturing purchases trees from Cascade Lumber and processes them up to the splitoff point where two products (paper and pencil casings) are obtained. The products are then sold to an independent company that...
Please join StudyMode to read the full document