Question : 83.A company has just received a special, one-time order for : 1258721

83.A company has just received a special, one-time order for 1,000 units. Producing the order will have no effect on the production and sales of other units. The buyer’s name will be stamped on each unit, at a cost of $1.50 per unit. Normal cost data, excluding stamping, follows: 

Direct materials$10per unit

Direct labor16per unit

Variable overhead4per unit

Allocated fixed overhead12per unit

Allocated fixed selling expense8per unit

Prepare an analysis that indicates the selling price per unit this company will require to earn $3,000 on the order.  84.Spilker Linens Store has three departments: Bath, Kitchen, and Bedding. The most recent income statement, showing the total operating profit and departmental results is shown below: 

TotalBathKitchenBedding

Sales$2,100,000$1,000,000$600,000$500,000

Cost of goods sold(1,260,000)(500,000) (400,000)    (360,000)

Gross profit840,000500,000 200,000140,000

Direct expenses(420,000)(200,000) (100,000)(120,000)

Allocated expenses (350,000) (100,000)  (75,000)   (175,000)

Net income (loss)    $70,000 $200,000  $25,000                ($155,000)

Based on this income statement, management is planning on eliminating the Bedding department, as it is generating a net loss. If the Bedding department is eliminated, the Kitchen department will expand to fill the space, but sales will not change in total, nor will direct expenses. None of Bedding’s allocated expenses will be avoided, but they will be reallocated to Bath and Kitchen. Bath will be allocated $100,000 additional expenses, and Kitchen will be allocated $75,000 additional expenses. Prepare a new income statement for Spilker Linens Store, showing the results if the Bedding Department is eliminated and indicate whether eliminating the department is advisable.   85.Luxury Linens has three departments: Bath, Kitchen, and Bedding. The most recent income statement, showing the total operating profit and departmental results is shown below: 

TotalBathKitchenBedding

Sales$2,100,000$1,000,000$500,000 $600,000

Cost of goods sold(1,260,000)(500,000) (360,000)    (400,000)

Gross profit840,000500,000140,000 200,000

Direct expenses(420,000)(200,000) (120,000)(100,000)

Allocated expenses (325,000) (100,000) (150,000)   (75,000)

Net income (loss)   $95,000 $200,000 ($130,000)                 $25,000

Based on this income statement, management is considering eliminating the Kitchen department. If the Kitchen department is eliminated, the other departments will expand to fill the space but sales are not expected to change. Twenty percent of Kitchen’s allocated expenses will be avoided due to restructuring and the remainder reallocated equally to Bath and Bedding. Show an analysis indicating whether the Kitchen department should be eliminated.    

86.Generalware, Inc. sells a single product and reports the following results from sales of 100,000 units: 

Sales ($45 unit)$4,500,000

Less costs and expenses:

Direct materials ($16/unit)$1,600,000

Direct labor ($9/unit)900,000

Variable overhead ($3/unit)300,000

Fixed overhead ($8.10/unit)810,000

Variable administrative ($4.50/unit)450,000

Fixed administrative ($4/unit)        400,000

Total costs and expenses($4,460,000)

Operating income        $40,000

A foreign company wants to purchase 15,000 units. However, they are willing to pay only $36 per unit for this one-time order. They also agree to pay all freight costs. To fill the order, Generalware will incur normal production costs. Total fixed overhead will have to be increased by $60,000 to pay for equipment rentals and insurance. No additional administrative costs (variable or fixed) will be incurred in association with this special order.Required: (1) Should Generalware accept the order if it does not affect regular sales? Explain. (2) Assume that Generalware can accept the special order only by giving up 5,000 units of its normal sales. Should the company accept the special order under these circumstances?