Purchase Solution

Ritter Rotator Company: Special Order

Not what you're looking for?

Ask Custom Question

The manufacturing capacity of Ritter Rotator Company's plant facility is 60,000 rotators per quarter. Operating results for the first quarter of 2009 are as follows:Sales (36,000 units @ RM10)RM360,000Less: Variable manufacturing and selling costs: 198,000, Contribution margin RM: 162,000, Fixed costs: 99,000, Operating income RM: 63,000A, foreign distributor has offered to buy 30,000 units at RM9 per unit during the second quarter of 2009. Domestic demand is expected to remain the same as in the first quarter.

Determine the impact on operating income if Ritter accepts this order. What other considerations are relevant in this decision? Assume that Ritter decides to run an extra shift so that it can accept the foreign order without foregoing sales to its regular domestic customers. The proposed extra shift would increase capacity by 25% and increase fixed costs by RM25,000. Determine the impact on operating income if Ritter operates the extra shift and accepts the export order. What other considerations are relevant in this decision?

Purchase this Solution
Solution Summary

Your tutorial offers two computations of the incremental revenues and incremental costs of the special order. Five qualitative factors are mentioned for your review.

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
Recent Feedback
  • "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
  • "Thank, this is more clear to me now."
  • "Awesome job! "
  • "ty"
  • "Great Analysis, thank you so much"
Purchase this Solution
Free BrainMass Quizzes
Operations Management

This quiz tests a student's knowledge about Operations Management

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

View More Free Quizzes
Related BrainMass Solutions

  • Job Order Cost System and Process Cost System

    Exercise 18-7A Job-order cost system: The following information applies to Job 730 completed by Ritter Manufacturing Company during October 2005. The amount of labor cost for the job was $67,350. Applied overhead amounted to $96,000.

  • Social Maladjustment vs. Emotional Disturbance

    The original intent of this clause was to exclude "adjudicated delinquents" from the special education realm, however such conditions have been found to be comorbid (McConaughy & Ritter, 2002, p. 1315).

  • Health Care: Number of Healthy Days vs. Price of Treatments

    If the number of visits is zero, the patient will have 180 healthy days and it will take 185 (365 - 180) days to recover from the rotator cuff injury.

  • Parenting Styles and Development

    (Hickman, Bartholomae, & McKenry, 2000, p. 42, as cited in Ritter, n.d.).

  • Ritter Company

    Ritter Company's stock has a beta of 1.40, the risk-free rate is 4.25%, and the market risk premium is 5.50%. What is Ritter's required rate of return?

  • Knee and Shoulder Joints

    Slide 13 Shoulder view Slide 14 Slide 15 - Rotator cuff injury is cause by a strain or tear in the rotator cuff muscles.

  • Find QR decomposition to solve a least squares solution.

    73603 Find QR Decomposition to Solve a Least Squares Solution How will you calculate a decomposition where is rotator, and is and use it to calculate the least square solution? And also deduce the norm of the residual.

  • Consolidation Acquisition Method: Caldwell Inc, McGraw Corp

    McGraw Corp. owned all of the voting common stock of both Ritter Co. and Lawler Co. During 2011, Ritter sold inventory to Lawler. The goods had cost Ritter $65,000, and they were sold to Lawler for $100,000.

  • Bones and muscle

    Humerus - Four rotator muscles, the deltoids, the teres major, and the triceps. The pectoralis major also attaches to the humerus. 17. Pelvis - The glutes, adductors, hamstrings, and deep hip rotators attach to the pelvis.

View More Related Solutions