MA9902C00 Lecture Notes - Radiance, J. Walter Thompson, Correspondence Problem
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1-23 | (Organizations associated with the public accountingprofession) Several private and public sectororganizations are associated with the profession. Listed below areactivities pertaining to these organizations.
Required Indicate the organization ororganizations associated with each activity |
All the following are considered to be benefits of participativebudgeting, except for: (please provide the necessary briefexplanation to justify)
A. | Individuals at all organizational levels are recognized as beingpart of a team; this results in greater support for theorganization. |
B. | The budget estimates are prepared by those in directly involvedin activities. |
C. | When managers set their own targets for the budget, topmanagement need not be concerned with the overall profitability ofoperations. |
D. | Managers are held responsible for reaching their goals andcannot easily shift responsibility by blaming unrealistic goals setby others |
Maria's Food Service provides meals that nonprofit organizations distribute to handicapped and elderly people. Here is her forecasted income statement for April, when she expects to produce and sell 3,900 meals:
Amount Per Unit
Sales revenue $ 26,910 $ 6.90
Costs of meals produced 19,305 4.95
Gross profit $ 7,605 $ 1.95
Administrative costs 3,120 0.80
Operating profit $ 4,485 $ 1.15
Fixed costs included in this income statement are $7,605 for meal production and $780 for administrative costs. Maria has received a special request from an organization sponsoring a picnic to raise funds for the Special Olympics. This organization is willing to pay $3.95 per meal for 300 meals on April 10. Maria has sufficient idle capacity to fill this special order. These meals will incur all of the variable costs of meals produced, but variable administrative costs and total fixed costs will not be affected.
Required: a. What impact would accepting this special order have on operating profit?
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