The Melville Corporation produces a single product called a Pong. Melville has the capacity to produce 60,000 Pongs each year. If Melville produces at capacity, the per unit costs to produce and sell one Pong are as follows: Direct materials$15Direct labor$12Variable manufacturing overhead$8Fixed manufacturing overhead$9Variable selling expense$8Fixed selling expense$3The regular selling price for one Pong is $80. A special order has been received by Melville from Mowen Corporation to purchase 6,000 Pongs next year. If this special order is accepted, the variable selling expense will be reduced by 75%. However, Melville will have to purchase a specialized machine to engrave the Mowen name on each Pong in the special order. This machine will cost $9,000 and it will have no use after the
special order is filled. The total fixed manufacturing overhead and selling expenses would be unaffected by this special order. Assume that direct labor is a variable cost.Assume Melville can sell 58,000 units of Pong to regular customers next year. If Mowen Corporation offers to buy the 6,000 special order units at $65 per unit, the annual financial advantage (disadvantage) for Melville as a result of accepting this special order should be:
A. $36,000
B. $192,000
C. $47,000
D. $11,000
Answer: D
You might also like to view...
According to research studies, the closest relationships between customers and suppliers arise when ________
A) supply is important to the customer and there were procurement obstacles B) procurement is simple C) there are many undifferentiated vendors in the marketplace D) the customer is highly price sensitive E) the suppliers charge a premium for their products
Which of the following approaches would not be effective in service recovery?
A. Providing a fair solution B. Interrupting the customer C. Resolving the problem quickly D. Responding sympathetically E. Listening to the customer
In CASE 7.2, Kurashige v. Indian Dunes, Inc (1988), plaintiff Kurashige, used Indian Dunes Park for motorcycle dirtbike riding. Prior to entering the park he signed a general release. Kurashige was injured and sued Indian Dunes. How did the court rule and why?
a. For the defendant, holding that the release was not unconscionable, and that all the risk was on the plaintiff. b. For the plaintiff, holding that the release was unconscionable, and that all the risk was on the defendant. c. For the defendant, holding that the release was enforceable, and that plaintiff should have been insured. d. For the plaintiff, because the release was enforceable based on the plaintiffs age in that he could not legally contract.
Before a lawsuit begins, the court must have proof that the defendant was notified of the lawsuit
Indicate whether the statement is true or false