Miller company produces speakers for home stereo

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Intermediate Financial Management
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Chapter 14 / Exercise 03
Intermediate Financial Management
Brigham/Daves
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74. Miller Company produces speakers for home stereo units. The speakers are sold to retail stores for $30. Manufacturing and other costs are as follows: Variable costs per unit: Fixed costs per month: Direct materials $ 9.00 Factory overhead $120,000 Direct labor 4.50 Selling and admin. 60,000Factory overhead 3.00 Total $180,000Distribution 1.50Total $18.00The variable distribution costs are for transportation to the retail stores. The current production and sales volume is 20,000 per year. Capacity is 25,000 units per year. An Atlanta wholesaler has proposed to place a special one-time order for 7,000 units at a special price of $25.20 per unit. The wholesaler would pay all distribution costs, but there would be additional fixed selling and administrative costs of $6,000. In addition, assume that overtime production is not possible and that all other information remains the same as the original data. What is the effect on profits if the special order is accepted?A. increase of $54,900B.increase of $30,900C. increase of $36,900D. increase of $176,400
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Intermediate Financial Management
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Chapter 14 / Exercise 03
Intermediate Financial Management
Brigham/Daves
Expert Verified
75. Boone Products had the following unit costs: Direct materials $24 Direct labor 10 Variable factory overhead 8 Fixed factory overhead (allocated) 18 A one-time customer has offered to buy 1,000 units at a special price of $48 per unit. Assuming that sufficient unused production capacity exists to produce the order and no regular customers will be affected by the order, how much additional profit (loss) will be generated from the special order?A. $12,000 lossB. $14,000 profitC. $48,000 profitD.$6,000 profit76. Reggie Corporation manufactures a single product with the following unit costs for 1,000 units: Direct materials $2,400 Direct labor 960 Factory overhead (30% variable) 1,800 Selling expenses (50% variable) 900 Administrative expenses (10% variable) 840Total per unit $6,900Recently, a company approached Reggie Corporation about buying 100 units for $5,100 each. Currently, the models are sold to dealers for $7,800. Reggie Corporation's capacity is sufficient to produce the extra 100 units. No additional selling expenses would be incurred on the special order. How much will income change if the special order is accepted?A. increase by $398,400B. decrease by $180,000C.increase by $111,600D. no change77. Reggie Corporation manufactures a single product with the following unit costs for 1,000 units: Direct materials $2,400 Direct labor 960 Factory overhead (30% variable) 1,800 Selling expenses (50% variable) 900 Administrative expenses (10% variable) 840Total per unit $6,900Recently, a company approached Reggie Corporation about buying 100 units for $5,100 each. Currently, the models are sold to dealers for $7,800. Reggie Corporation's capacity is sufficient to produce the extra 100 units. No additional selling expenses would be incurred on the special order. If Reggie Corporation wants to increase its profit by $18,000 on the special order, what is the minimum price it should charge per unit?A. $4,014B.$4,164C. $5,100D. $6,900

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