6. Famsworth Television makes and sells portable $200. The following cost data p

Question

6. Famsworth Television makes and sells portable $200. The following cost data per based ona each period: cost dataes and sells portable television sets. Each television regularly sells or ision are based on a full capacity of 12,000 televisions produced $75 $55 Direct materials.. Direct labr S48 Manufacturing overhead (75% variable, 25% unavoidable fixed) A special order has been received by Famsworth for a sale of 2,500 televisions to an overseas customer. The only selling costs that would be incurred on this order would be $15 per television for shipping. Farnsworth is now selling 7,200 televisions through regular distributors each period. W shoild te the miimum seling price per teleon onder? Choose the closest answer). A. $188 B. S166 C $178 D. $176 E. S181 7. Yukon Perfume Corporation manufactures three distinct perfumes (1, II, and III) from a single joint process. The three perfumes can be sold to discount stores in the form they are in at the split-off point. However, if the perfumes are further processed, they can be sold to specialty stores. Costs related to each batch of perfume separation is as follows: Sales value at split-off point. Allocated joint costs. Sales value after further processing.. Perfunnel Perfume ll Perfume 111 1,500 $1.200 $1,600 $1,000 $1,000 $1,000 $3,500 $2,500 $2.000 $500 Cost of further processin $1.600 $1.400 For which product(s) above would it be more profitable for Yukon to sell fter furher processing rather than at the split-off point? A. I only B. III only C. I and II only D. II and Ill only E. I, II, and III

Explanation / Answer

Answer:-6)- The minimum selling price per television in negotiating a price for this special order should be $181 per television (option E).

Explanation:-

a)-Minimum selling price = Direct material + Direct labor + Manufacturing overhead (only variable part) + Selling cost (Extra cost)

               = $75 per television +$55 per television+$36 per television (ie-$48*75%)+$15 per television

              =$181 per television

b)- Fixed cost of manufacturing overhead is unavoidable fixed cost hence it is not relevant for decision to accepting special order.

c)- Spare capacity of Famsworth Television =12000 televisions – 7200 televisions =4800 televisions

Hence only variable cost + Avoidable cost + Extra cost (ie- specially for special order) should be charged.

7) Product Perfume I would be more profitable for Yukon to sell after further processing rather than split-off point (option A).

Explanation:-

Yukon Perfume Corporation Statement of Profitablity of three products Particulars Perfume I Perfume II Perfume III $ $ $ Sale value after further processing 3500 2500 2000 Less:- Sales value at split-off point 1500 1200 1600 Incremental value from further processing 2000 1300 400 Less:- Cost of further processing 1600 1400 500 Profit (loss) from further processing 400 (100) (100)

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