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# Managerial Accounting

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(1)
Rayburn's Tents makes backpacking tents. It has the capacity to produce 10,000 tents per year and currently is producing and selling 7,000 tents. Normal selling price for a tent is \$470. Unit-level costs are \$100 for direct materials, \$200 for direct labor, and \$25 for other manufacturing costs. Facility-level costs of \$80 are allocated to each tent. Rayburn's has received a special order for 1,500 tents at \$340 each.

Required: Should Rayburn's accept the special order? Support your answer with appropriate computations.

(2)
Hart Company currently produces a component that it uses in making some of its products. Hart has calculated the following costs for making the part:

Hart is considering outsourcing the component. A supplier has offered to sell the component to Hart for \$54 each. Hart needs 10,000 units each year.
Required: Should Hart outsource the component? Support your answer with appropriate computations.

(3)
Don's Game Store sells computer and other electronic games. The store has budgeted sales for January 2008 as indicated in the following table. The company expects an 8 percent increase in sales for the month of February and a 5 percent increase for March.

Required:
A) Complete the sales budget by filling in the missing amounts.

#### Solution Preview

(1)
Rayburn's Tents makes backpacking tents. It has the capacity to produce 10,000 tents per year and currently is producing and selling 7,000 tents. Normal selling price for a tent is \$470. Unit-level costs are \$100 for direct materials, \$200 for direct labor, and \$25 for other manufacturing costs. Facility-level costs of \$80 are allocated to each tent. Rayburn's has received a special order for 1,500 tents at \$340 each.

Required: Should Rayburn's accept the special order? Support your answer with appropriate computations.

Here there is excess capacity and in case of excess capacity, only the ...

#### Solution Summary

The solution has various problems relating to managerial accounting.

\$2.19