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Carlsbad Enterprises has a capacity to produce 360,000 computercases per year. The company is currently producing and selling280,000 cases per year at a selling price of $396 per case. Thecost of producing and selling one case follows:

Variable manufacturing costs $ 159

Fixed manufacturing costs 41

Variable selling and administrative costs 85

Fixed selling and administrative costs 20

Total costs $ 305

The company has received a special order for 40,000 cases at aprice of $250 per case. Because it does not have to pay a salescommission on the special order, the variable selling andadministrative costs would be only $52 per case. The special orderwould have no effect on total fixed costs. The company has rejectedthe offer based on the following computations:

Selling price per case $ 250

Variable manufacturing costs 159

Fixed manufacturing costs 41

Variable selling and administrative costs 52

Fixed selling and administrative costs 20

Net loss per case $ (22 )

Required:

Find the Status Quo for 280000 units and the alternative for32000 units

280000 320000
Sales Revenue
Variable Cost:
Manufacturing Cost
Selling and Administrative Cost
Contribution Cost
Fixed Cost
Operating Profit

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Lelia Lubowitz
Lelia LubowitzLv2
28 Sep 2019

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Alpine Luggage has a capacity to produce 360,000 suitcases peryear. The company is currently producing and selling 280,000 unitsper year at a selling price of $395 per case. The cost of producingand selling one case follows:

Variable manufacturingcosts $ 158
Fixed manufacturing costs 41
Variable selling andadministrative costs 82
Fixed selling and administrativecosts 21
Total costs $ 302

The company has received a special order for 20,000 suitcases ata price of $251 per case. It will not have to pay any salescommission on the special order, so the variable selling andadministrative costs would be only $50 per suitcase. The specialorder would have no effect on total fixed costs. The company hasrejected the offer based on the following computations:

Selling price percase $ 251
Variable manufacturingcosts 158
Fixed manufacturing costs 41
Variable selling andadministrative costs 50
Fixed selling and administrativecosts 21
Net profit (loss) per case $ (19 )

Required:

a. What is the impact on profit for the year ifAlpine accepts the special order? (Enter your answers inthousands of dollars. Select option "higher" or "lower", keepingStatus Quo as the base. Select "none" if there is noeffect.)

(All costs in $000)
Status Quo 280,000 Units Alternative 300,000 Units Difference
Sales revenue $115,620 higher
Variable costs:
Manufacturing higher
Selling and administrative 23,960 higher
Contribution margin higher
Fixed costs none
Operating profit higher

*************PLEASE SHOW ME HOW YOU GET EACH NUMBER IN THEBOXES. I HAVE THOSE TWO NUMBERS FILLED IN AND I DON'T REMEBER HOW IGOTTHEM.*****************************************************************

Absorption and Variable Costing Comparisons Peachtree Companymanufactures peach jam. Because of bad weather, its peach crop wassmall. The following data have been gathered for the summer quarterof 2014: Beginning inventory (cases) 0 Cases produced 9,000 Casessold 8,200 Sales price per case $ 60 Direct materials per case $ 8Direct labor per case $ 9 Variable manufacturing overhead per case$ 3 Total fixed manufacturing overhead $ 320,000 Variable sellingand administrative cost per case $ 2 Fixed selling andadministrative cost $ 48,000 (a) Prepare a functional incomestatement for the quarter using absorption costing. (Round answersto the nearest dollar. Do not use negative signs with your answers,EXCEPT if you calculate a net loss.) Peachtree Company Functional(Absorption Costing) Income Statement For the Summer Quarter 2014Sales $Answer Cost of goods sold: Variable costs $Answer Fixedcosts Answer Goods available Answer Ending inventory Answer AnswerGross profit Answer Operating expenses: Variable selling andadministrative $Answer Fixed selling and administrative AnswerAnswer Net income (loss) $Answer (b) Prepare a contribution incomestatement for the quarter using variable costing. (Do not usenegative signs with your answers, EXCEPT if you calculate a netloss.) Peachtree Company Contribution (Variable Costing) IncomeStatement For the Summer Quarter 2014 Sales $Answer Variableexpenses: Manufacturing $Answer Selling and administrative AnswerAnswer Contribution margin Answer Fixed expenses: Manufacturingoverhead $Answer Selling and administrative Answer Answer Netincome (loss) $Answer (c) What is the value of ending inventoryunder absorption costing? (Round answer to the nearest wholenumber.) $Answer (d) What is the value of ending inventory undervariable costing? $Answer (e) The difference in the value of endinginventory in parts (c) and (d) is explained by the followingdifference between absorption and variable costing: Variablecosting treats all manufacturing costs as variable costs whileabsorption costing treats only variable manufacturing costs asvariable costs. Absorption costing treats fixed costs as periodcosts while variable costing treats fixed costs as product costs.Variable costing assigns only variable manufacturing costs toproducts while absorption costing assigns both variable and fixedmanufacturing costs to products. Absorption costing treats allmanufacturing costs as period costs while variable costing treatsonly variable manufacturing costs as period costs. Check Next

Palmer Company manufactures and sells trophies for winners ofathletic and other events. Its manufacturing plant has the capacityto produce 22,000 trophies each month; current monthly productionis 20,900 trophies. The company normally charges $62 per trophy.Cost data for the current level of production are shownbelow.

Variable Costs

Direct Materials

$541,880

Direct Labor

$193,800

Selling and Administrative

$41,100

Fixed Costs

Manufacturing

$250,000

Selling and Administrative

$133,000


The company has just received a special one-time order for 800trophies at $31 each. For this particular order, no variableselling and administrative costs would be incurred. This orderwould also have no effect on fixed costs.

Required:

Should the company accept this special order? Provide numericalsupport for your decision.

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