Homestead Jeans Co.has an annual plant capacity of 65,500 units, and currentproduction is 43,000 units. Monthly fixed costs are $38,000, andvariable costs are $25 per unit. The present selling price is $37per unit. On November 12 of the current year, the company receivedan offer from Dawkins Company for 13,600 units of the product at$27 each. Dawkins Company will market the units in a foreigncountry under its own brand name. The additional business is notexpected to affect the domestic selling price or quantity of salesof Homestead Jeans Co.
a.Prepare a differential analysis dated November 12 on whether toreject (Alternative 1) or accept (Alternative 2) the Dawkins order.If an amount is zero, enter "0". For those boxes in which you mustenter subtracted or negative numbers use a minus sign.
Differential Analysis Reject Order (Alt. 1) or Accept Order (Alt.2) November 12 Reject Order(Alternative 1) Accept Order(Alternative 2) Differential Effecton Income (Alternative 2) Revenues $ $ $ Costs: Variable manufacturingcosts Income (Loss) $ $ $
b.Having unused capacity available is to this decision. Thedifferential revenue is than the differential cost. Thus, acceptingthis additional business will result in a net .
c.What is the minimum price per unit that would produce a positivecontribution margin? Round your answer to two decimal places.
Calgary Lumber Companyincurs a cost of $392 per hundred board feet (hbf) in processingcertain ârough-cutâ lumber, which it sells for $546 per hbf. Analternative is to produce a âfinished cutâ at a total processingcost of $529 per hbf, which can be sold for $754 per hbf.
a.Prepare a differential analysis dated March 15, on whether to sellrough-cut lumber (Alternative 1) or process further intofinished-cut lumber (Alternative 2).
Differential Analysis Sell Rough-Cut (Alt. 1) or Process Further intoFinished-Cut (Alt. 2) March 15 Sell Rough-Cut
(Alternative 1) Process Further
into Finished-Cut
(Alternative 2) Differential
Effect on Income
(Alternative 2) Revenues, per unit $ $ $ Costs, per unit Income (Loss), per unit
$ $ $
Homestead Jeans Co.has an annual plant capacity of 65,500 units, and currentproduction is 43,000 units. Monthly fixed costs are $38,000, andvariable costs are $25 per unit. The present selling price is $37per unit. On November 12 of the current year, the company receivedan offer from Dawkins Company for 13,600 units of the product at$27 each. Dawkins Company will market the units in a foreigncountry under its own brand name. The additional business is notexpected to affect the domestic selling price or quantity of salesof Homestead Jeans Co.
a.Prepare a differential analysis dated November 12 on whether toreject (Alternative 1) or accept (Alternative 2) the Dawkins order.If an amount is zero, enter "0". For those boxes in which you mustenter subtracted or negative numbers use a minus sign.
| Differential Analysis | |||
| Reject Order (Alt. 1) or Accept Order (Alt.2) | |||
| November 12 | |||
| Reject Order(Alternative 1) | Accept Order(Alternative 2) | Differential Effecton Income (Alternative 2) | |
| Revenues | $ | $ | $ |
| Costs: | |||
| Variable manufacturingcosts | |||
| Income (Loss) | $ | $ | $ |
b.Having unused capacity available is to this decision. Thedifferential revenue is than the differential cost. Thus, acceptingthis additional business will result in a net .
c.What is the minimum price per unit that would produce a positivecontribution margin? Round your answer to two decimal places.
Calgary Lumber Companyincurs a cost of $392 per hundred board feet (hbf) in processingcertain ârough-cutâ lumber, which it sells for $546 per hbf. Analternative is to produce a âfinished cutâ at a total processingcost of $529 per hbf, which can be sold for $754 per hbf.
a.Prepare a differential analysis dated March 15, on whether to sellrough-cut lumber (Alternative 1) or process further intofinished-cut lumber (Alternative 2).
| Differential Analysis | |||
| Sell Rough-Cut (Alt. 1) or Process Further intoFinished-Cut (Alt. 2) | |||
| March 15 | |||
| Sell Rough-Cut (Alternative 1) | Process Further into Finished-Cut (Alternative 2) | Differential Effect on Income (Alternative 2) | |
| Revenues, per unit | $ | $ | $ |
| Costs, per unit | |||
Income (Loss), per unit | $ | $ | $ |
