70.2K

Verified Solution

Link Copied!

Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 91,200 units per year is: The normal selling price is $23.00 per unit. The company's capacity is 112,800 units per year. An order has been received from a mailorder house for 1,800 units at a special price of $20.00 per unit. This order would not affect regular sales or the company's 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 company's 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. The company does not expect the selling of these inferior units to have any effect on the sales of its current model. What unit cost is relevant for establishing a minimum selling price for the inferior units? Complete this question by entering your answers in the tabs below. As a separate matter from the special order, assume the company's 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. The company does not expect the selling of these inferior units to have any effect on the sales of its current model. What unit cost is relevant for establishing a minimum selling price for the inferior units? (Round your answer to 2 decimal places.) *Allocated on the basis of program revenues. The head administrator of Jackson County Senior Services, Judith Miyama, considers last year's net operating income of $51,200 to be unsatisfactory: therefore, she is considering the possibility of discontinuing the housekeeping program. The depreciation in housekeeping is for a small van that is used to carry the housekeepers and their equipment from job to job. If the program were discontinued, the van would be donated to a charitable organization. None of the general administrative overhead would be avoided if the housekeeping program were dropped, but the liability insurance and the salary of the program administrator would be avoided. Requlred: 1-a. What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? 1b. Based on the financial advantage (disadvantage) of discontinuing the Housekeeping program calculated in requirement Req 1A. should the Housekeeping program be discontinued? 2-a. Prepare a properly formatted segmented income statement. 2b. Would a segmented income statement format be more useful to management in assessing the long-run financial viability of the various services? Complete this question by entering your answers in the tabs below. Prepare a properly formatted segmented income statement

Answer & Explanation Solved by verified expert

See Answer