EXERCISE 6 - EXERCISE 6-1 (a) Reject Order $0 0 0 $0 Accept...

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EXERCISE 6-1 (a) Reject Order Accept Order Net Income Increase (Decrease) Revenues (15,000 X $7.50) Cost of goods sold Operating expenses Net income $0 0 0 $0 $112,500 75,000 29,250 $ 8,250 (1) (2) ( $112,500 ) ( (75,000) ( (29,250 ) ( $ 8,250 ) (1) Variable cost of goods sold = $2,500,000 X 70% = $1,750,000. Variable cost of goods sold per unit = $1,750,000 ÷ 350,000 = $5. Variable cost of goods sold for the special order = $5 X 15,000 = $75,000. (2) Variable operating expenses = $875,000 X 70% = $612,500 $612,500 ÷ 350,000 = $1.75 per unit 15,000 X $1.75 = $26,250 $26,250 + $3,000 = $29,250 (b) As shown in the incremental analysis, Quick Company should accept the special order because incremental revenues exceed incremental expenses by $8,250. EXERCISE 6-3 (a) Make Buy Net Income Increase (Decrease) Direct materials (30,000 X $5.00) Direct labor (30,000 X $6.00) Variable manufacturing costs ($180,000 X 70%) Fixed manufacturing costs Purchase price (30,000 X $15.50) $150,000 180,000 126,000 45,000 0 $ 0 0 0 45,000 465,000 $150,000 180,000 126,000 0 ( (465,000 )
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EXERCISE 6 - EXERCISE 6-1 (a) Reject Order $0 0 0 $0 Accept...

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