95%(149)142 out of 149 people found this document helpful
This preview shows page 186 - 189 out of 198 pages.
Question CPA-04267Kator Co. is a manufacturer of industrial components. One of their products that is used as a sub-component in auto manufacturing is KB-96. This product has the following financial structure per unit.Selling Price$150Direct materials$ 20Direct labor15Variable manufacturing overhead12Fixed manufacturing overhead30Shipping and handling3Fixed selling and administrative10Total costs$ 90Kator Co. has received a special, one-time, order for 1,000 KB-96 parts. Assuming Kator has excess capacity, the minimum price that is acceptable for this one-time, special order is in excess of:a.$47b.$50c.$60d.$90ExplanationChoice "b" is correct. $50 (variable cost) is the minimum price that is acceptable for this one-time, special order, assuming excess capacity is available.VariablecostSelling price$150.00Direct materials$ 2020Direct labor1515Variable manufacturing overhead1212Fixed manufacturing overhead30−Shipping and handling33Fixed selling and administrative10−Total costs$ 9050Choices "a", "c", and "d" are incorrect, per the above calculation.