Purchase Solution

Glade Company produces a single product.

Not what you're looking for?

Ask Custom Question

Glade Company produces a single product. The costs of producing and selling a single unit of this product at the company's current activity level of 8,600 units per month are:

Direct materials $ 3.10
Direct labor $ 4.00
Variable manufacturing overhead $ 1.40
Fixed manufacturing overhead $ 5.25
Variable selling and administrative expenses $ 2.30
Fixed selling and administrative expenses $ 3.00

The normal selling price is $11 per unit. The company's capacity is 13,000 units per month. An order has been received from a potential customer overseas for 2,200 units at a price of $18 per unit. This order would not affect regular sales.

Requirement 1:
If the order is accepted, by how much will monthly profits increase or decrease? (The order will not change the company's total fixed costs.) (Input the amount as positive value)

Profits would increase by = $____________________

Requirement 2:
Assume the company has 500 units of this product left over from last year that are inferior to the current model. The units must be sold through regular channels at reduced prices. What unit cost is relevant for establishing a minimum selling price for these units? (Round your answer to 2 decimal places.)

Relevant Cost = $_________________________

Attachments
Purchase this Solution
Solution Summary

This solution is comprised of a detailed explanation to answer if the order is accepted, by how much will monthly profits increase or decrease?

Solution Preview

Glade Company produces a single product. The costs of producing and selling a single unit of this product at the company's current activity level of 8,600 units per month are:

Direct materials $ 3.10
Direct labor $ 4.00
Variable manufacturing overhead $ 1.40
Fixed manufacturing overhead $ 5.25
Variable selling and administrative expenses $ 2.30
Fixed selling and administrative expenses $ 3.00

The normal ...

Purchase this Solution
Free BrainMass Quizzes
Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

View More Free Quizzes
Related BrainMass Solutions

  • Glade Company - What unit cost is relevant?

    415631 Managerial Analysis - Glade Company - What unit cost is relevant for establishing a minimum selling price for these units? Glade Company produces a single product.

  • Confidence in the media

    For example, glade has odor killers and the commercial makes it seem like the product can eliminate all odors.

  • Environmental Policy Statement for Glade

    This explanation provides you a comprehensive argument relating to Environmental Policy Statement for Glade

  • Taxation: Like-kind exchange and other options

    Glade could complete the exchange, sign a note to the warehouse building owner and agree to cash out the note with a new loan in a short period of time. Glade could offer additional collateral to sweeten the deal for the warehouse owner.

  • variable costing vs absorbtion costing, BEP

    Gyro Gear Company produces a single product, a special gear used in automatic transmissions. Each gear sells for $28, and the company sells 500,000 gears each year.

  • Absorption costing net operating income

    The company produces and sells a single product.

  • Break-even sales

    ., which produces a single product, has provided the following data for its most recent month of operations: I need assistance with the following study questions. ________________________________________ Kray Inc., which produces a single product

  • White Company manufactures a single product and has the foll

    437353 White Company manufactures a single product and has the following cost structure: Variable costs per unit: Direct materials $ 3.50 Direct labor $ 4.75 Variable manufacturing overhead $ 1.25 Variable selling

  • Margin of Safety and Break-Even Points

    261011 Margin of Safety and Break-Even Points A company makes a single product that it sells for $16 per unit. Fixed costs are $76,800 per month and the product has a contribution margin ratio of 40%.

View More Related Solutions