Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. delta company produces a single product. the cost

Delta Company produces a single product. The cost of producing and selling a single unit...

70.2K

Verified Solution

Question

Accounting

Delta Company produces a single product. The cost of producing and selling a single unit of this product at the companys normal activity level of 104,400 units per year is:

Direct materials $ 1.50
Direct labor $ 3.00
Variable manufacturing overhead $ 0.70
Fixed manufacturing overhead $ 4.15
Variable selling and administrative expenses $ 1.50
Fixed selling and administrative expenses $ 2.00

The normal selling price is $23.00 per unit. The companys capacity is 136,800 units per year. An order has been received from a mail-order house for 2,700 units at a special price of $20.00 per unit. This order would not affect regular sales or the companys 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 companys inventory includes 1,000 units of this product that were produced last year and that are inferior to the current model. The units must be sold through regular channels at reduced prices. What unit cost is relevant for establishing a minimum selling price for these units?

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Electrical Engineering
1.2K views

Simplify Q2*= L’(F4+F5+F6+F7) + L +(F’1 F’2 F’3 F’5 F’6 F’7)+L’(F5+F6+F7)+ L’(F4+F3+F2+F1)+L+(F’1 F’2 F’3 F’4 F’6 F’7)+L’(F6+F7)+ L’(F5+F4+F3+F2+F1)+ L+(F’1 F’2 F’3 F’4 F’5 F’7)+L’(F7)+L’(F6+F5+F4+F3+F2+F1)+L+(F’1 F’2 F’3 F’4 F’5 F’6)            

Biology
1.2K views

A town must decide whether to convert their bus fleet from gasoline to electric powered...

Physics
1.2K views

The ratio of number of collisions per second at the walls of containers by He...

Physics
1.2K views

1 A voltage e t 100sin314t is applied to a series circuit consisting of 10...

Basic Math
1.2K views

A restaurant offers the following limited lunch menu.Main CoursesVegetablesBeveragesDessertsTurkey, Spaghetti, Meatloaf, Shrimp, HamburgerCorn, Green BeansCoffee,...

Algebra
1.2K views

mine if the statement is true or false E 1 5 6 9 10 se...

Algebra
1.2K views

A ball is thrown directly upward from a height of 5 ft with an initial...

Accounting
1.2K views

Analyzing and Computing Issue Price, Treasury Stock Cost, and Shares Outstanding Following is the stockholders'...

Accounting
1.2K views

The balance sheet for Miley Consulting reports the following information on July 1, 2014. Long-term...

Accounting
1.2K views

If Total Machine Hours 70,346 Applied Variable Overhead...

Accounting
1.2K views

Question 1 of 10 - 1 E View Policies Current Attempt in Progress James Smith,...

Accounting
1.2K views

Tempo Company's fixed budget (based on sales of 14,000 units) folllows. Fixed Budget ...