EXERCISE 6

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

This preview shows pages 1–2. Sign up to view the full content.

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 )

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

## This note was uploaded on 05/16/2011 for the course AC 303 taught by Professor Richardkido during the Spring '11 term at Chaminade University.

### Page1 / 4

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

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online