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B-23.03 Problem

# B-23.03 Problem - 30,000,000 \$ Fixed manufacturing costs...

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B-23.03 S l (9 000 X 000) 45 000 000 \$ GoWay manufacturers and sells a portable battery-powered transportation device that can be stored in a backpack. The device usually sells for \$5,000 per unit. The company normally sells units as quickly as manufactured and does not maintain a finished goods inventory. However, during the most recent year, the company produced 10,000 units, but only sold 9,000. A military customer has requested to buy the other 1,000 units for delivery on December 31 of the year current year. The offered price is \$4,000 per unit for all 1,000 units. Below are absorption-costing based calculations of ending inventory and net income, based on the 9,000 units already sold. Variable manufacturing costs (\$3,000 X 10,000)
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Unformatted text preview: 30,000,000 \$ Fixed manufacturing costs 12,000,000 Cost of goods manufactured 42,000,000 \$ Cost of goods sold (\$42,000,000 X (9,000/10,000)) 37,800,000 Ending inventory (\$42,000,000 X (1,000/10,000)) 4,200,000 \$ (9 000 X \$5 000 a es , \$5, , , Cost of goods sold 37,800,000 Gross profit 7,200,000 \$ Selling, general, & administrative costs Variable (9,000 X \$100) 900,000 \$ Fixed 5,800,000 6,700,000 Net income 500,000 \$ Prepare a revised absorption-costing based income statement, assuming acceptance of the 1,000 unit order. Also prepare variable-costing income statements (with and without the order). Compare the results and evaluate whether the order should be accepted....
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