Final Fa2009 Solution

Final Fa2009 Solution

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Unformatted text preview: source 21,[email protected] 21,000@$1 = 21,000 <$52,500> So, find P so that $189,000 = 21,000*P + 21,000 - 52,500 P = $10.50 6A:002 Fall 2009 – Final Exam Page 16 Use the following information about Alpine to answer questions 34 through 36. Alpine, Inc. produces boots. It has the capacity to produce 20,000 pairs of boots per year. Demand for its product has been 18,000 pairs per year and it expects this demand to be unchanged for the next five years. Because demand is stable, it uses a just-in-time inventory system that allows it to keep inventory levels at zero. Alpine prepared the following information about its annual boot production. Total Pairs produced and sold per year ....................................................... 18,000 Revenue ......................................................................................... $720,000 Cost of Goods Sold Direct materials and other variable manufacturing costs....... 252,000 Fixed manufacturing costs ..................................................... 198,000 Gross Margin ................................................................................... 270,000 Variable Selling and Admin. Costs ................................................... 63,000 Fixed Selling and Admin. Cost ....................................................... 108,000 Operating Income ............................................................................ $99,000 Per Unit $40.00 14.00 11.00 15.00 3.50 6.00 $5.50 Alpine has received a special one-time order for 1,500 pairs of boots. These boots would have a special tread that requires an initial setup cost of $6,000. All other costs would be the same as for Alpine’s regular boots. 34. Compute the minimum selling price per pair that Alpine should be willing to accept for the special order. Variable Manufacutring Cost 1,500 @ $14 Var. S&A 1,500 @ $3.50 Setup Total Cost (revenue needed to break even) Number of Units Minimum selling price per unit $21,000 5,250 6,000 32,250 1,500 $21.50 6A:00...
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This note was uploaded on 09/29/2011 for the course 06A 002 taught by Professor Stuff during the Spring '11 term at University of Iowa.

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