Purchase Solution

Special Order and Managerial Accounting

Not what you're looking for?

Ask Custom Question

Holiday Inc. sells a product that normally sells for $45 per unit. The variable cost is $27 per unit and fixed cost is $270,000. They are currently selling 18,000 units and have the capacity to make 20,000. They are approached about a special order for 2,000 units. The selling price would be $32 per unit and variable costs would be reduced by $2. However, a special piece of equipment would have to be rented for $1,500. What would be the effect on income if they accept the special order?

What if they are currently selling 18,500 units and thus would lose 500 regular sales for this year only?

Attachments
Purchase this Solution
Solution Summary

The solution explains how to determine the effect on net income of a special order

Solution Preview

Holiday Inc. sells a product that normally sells for $45 per unit. The variable cost is $27 per unit and fixed cost is $270,000. They are currently selling 18,000 units and have the capacity to make 20,000. They are approached about a special order for 2,000 units. The selling price would be $32 per unit and variable costs would be reduced by $2. However, a special piece of equipment would have ...

Purchase this Solution
Free BrainMass Quizzes
Situational Leadership

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

Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

View More Free Quizzes
Related BrainMass Solutions

  • Managerial Accounting: Marginal Cost of a Special Order

    507413 Managerial Accounting: Marginal Cost of a Special Order Mazeppa Corporation sells relays at a selling price of $28 per unit.

  • This post addresses financial and managerial accounting.

    Highly aggregate statements - Financial accounting i. Must conform to external standards - Financial accounting j. Special purpose reports - Managerial accounting k. Decision-making tool - Managerial accounting l.

  • Financial and managerial accounting

    fixed costs or whether to accept a special order or not.

  • Clarification of Managerial Accounting

    106908 Clarification of Managerial Accounting A. Imperial Jewelers is considering a SPECIAL ORDER for 20 handcrafted gold bracelets to be given as gifts to members of a wedding party.

  • Key Differences Between Financial and Managerial Accounting

    In this case the decisions would be whether to reduce or increase advertising expense and the impact on net income, whether to make of buy any part or product, whether to accept a special order at a lower price than the current selling price or to discontinue

  • "Financial accounting" and "managerial accounting" roles

    353064 "Financial accounting" and "managerial accounting" roles "Financial accounting" and "managerial accounting" roles and differences.

  • Managerial Accounting problems

    479697 Managerial Accounting problems, Foggy Mountain Company, Seager & Buffet , excess capacity of machine hours, variable overhead rate, unit contribution margin, actual gain (loss) incurred Managerial Accounting problems Foggy Mountain Company manufactures

  • minimum price per unit on the special order

    There would be no variable selling expense on this special order and the total fixed manufacturing overhead and fixed selling and administrative expenses of the company would not be affected by the order.

  • Managerial Accounting for Boca Raton

    How would this order affect operating income? Explain. Increase by ______________________________ Decrease by ______________________________ Solution attached. The solution explains the effect of special order on the operating income.

  • Special Order

    80867 Managerial Accounting The Melrose Company produces a single product, Product C. Melrose has the capacity to produce 70,000 units of Product C each year.

View More Related Solutions