Mojave Corporation makes several varieties of beach umbrellas and accessories. I
ID: 2523966 • Letter: M
Question
Mojave Corporation makes several varieties of beach umbrellas and accessories. It has been approached by a company called lost mine Industries and producing a special order for a custom umbrella called the ultimate shade....
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Preston ? 21.) Jay ? 1.M ?) ? C?| ? ezto.rnheducat E] (50%) 1? *Most Visited my.utrgv.edu?ALGEBRA@Login Search every ? Time remaining: 1:32.09 13. Mohave Corp. makes several varieties of beach umbrellas and accessonies. It has beern approached by a company called Lost Mine Industries about producing a special order for a custom umbrella called the Ultimate Shade (US). The special-order umbrellas with the Lost Mine Company logo would be distributed to participants at an upcoming convention sponsored by Lost Mine Lost Mine has offered to buy 2,900 of the US umbrellas at a price of 527 each. Mohave currently has the excess capacity necessary to accept the offer. The following information is related to the production of the US umbrella Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead $12.00 6.00 8.00 2.50 28.50 35.00 Total cost Regular sales price Required 1. Compute the incremental profit (or loss) from accepting the special order. by II Sc2 1080 30 29.... Chapter 10 test bank o acro Study NotesExplanation / Answer
1.
Total variable cost per unit = $ 12 + $ 6 + $ 8 = $ 26.
Contribution margin per unit = Unit Selling Price - Variable Cost per Unit = $ 27 - $ 26 = $ 1
Profit would increase by 2,900 x $ 1 = $ 2,900.
As total fixed manufacturing costs will remain the same regardless whether the special order is accepted or not, they are not relevant.
2. Yes.
3.
Incremental Profit ( Loss) = 3,400 x $ ( 25 - 26) = $ ( 3,400)
4. Special order price = $ 28.50 + $ ( 35 - 26) = $ 37.50.
Profit increases by $ 2,900Related Questions
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