Haresh Thornton Concrete Company pours concrete slabs for single-family dwellings. Lancing Construction Company, which operates outsideThornton's normal sales territory, asks Thornton to pour 47 slabs for Lancing's new development of homes. Thornton has the capacityto build 440 slabs and is presently working on 190 of them. Lancing is willing to pay only $2,510 per slab. Thornton estimates the costof a typical job to include unit-level materials, $900; unit-level labor, $480; and an allocated portion of facility-level overhead, $1,180.RequiredCalculate the contribution to profit from the special order. Should Thornton accept or reject the special order to pour 47 slabs for$2,510 each?Contribution to profitShould Thornton accept or reject the special order?Accept

To calculate the contribution to profit from the special order and determine whether Thornton should…

Answered: Thornton Concrete Company pours…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Walton Concrete Company pours concrete slabs for single-family dwellings. Lancing Construction Company, which operates outside Walton's normal sales territory, asks Walton to pour 53 slabs for Lancing's new development of homes. Walton has the capacity to build 400 slabs and is presently working on 140 of them. Lancing is willing to pay only $2,690 per slab. Walton estimates the cost of a typical job to include unit-level materials, $990; unit-level labor, $580; and an allocated portion of facility-level overhead, $1,160. Required Calculate the contribution to profit from the special order. Should Walton accept or reject the special order to pour 53 slabs for $2,690 each? Contribution to profit Should Walton accept or reject the special order?
Adams Concrete Company pours concrete slabs for single-family dwellings. Lancing Construction Company, which operates outside Adams's normal sales territory, asks Adams to pour 50 slabs for Lancing's new development of homes. Adams has the capacity to build 360 slabs and is presently working on 210 of them. Lancing is willing to pay only $2,660 per slab. Adams estimates the cost of a typical job to include unit-level materials, $960; unit-level labor, $490; and an allocated portion of facility-level overhead, $1,300. Required Calculate the contribution to profit from the special order. Should Adams accept or reject the special order to pour 50 slabs for $2,660 each?
Solomon Concrete Company pours concrete slabs for single-family dwellings. Lancing Construction Company, which operates outside Solomon's normal sales territory, asks Solomon to pour 49 slabs for Lancing's new development of homes. Solomon has the capacity to build 330 slabs and is presently working on 180 of them. Lancing is willing to pay only $2,630 per slab. Solomon estimates the cost of a typical job to include unit-level materials, $860; unit-level labor, $530; and an allocated portion of facility-level overhead, $1,310. Required Calculate the contribution to profit from the special order. Should Solomon accept or reject the special order to pour 49 slabs for $2,630 each? Contribution to profit Should Solomon accept or reject the special order? Accept
Perez Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,300 containers follows. Unit-level materials Unit-level labor Unit-level overhead Product-level costs* Allocated facility-level costs. $6,100 6,700 3,700 11,100 28,100 *One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Perez for $2.50 each. Required a. Calculate the total relevant cost. Should Perez continue to make the containers? b. Perez could lease the space it currently uses in the manufacturing process. If leasing would produce $12,500 per month, calculate the total avoidable costs. Should Perez continue to make the containers? a. Total relevant cost a. Should Perez continue to make the containers? b. Total avoidable cost b. Should Perez continue to make the containers?
Munoz Concrete Company pours concrete slabs for single-family dwellings. Lancing Construction Company, which operates outside Munoz's normal sales territory, asks Munoz to pour 45 slabs for Lancing's new development of homes. Munoz has the capacity to build 490 slabs and is presently working on 140 of them. Lancing is willing to pay only $2,650 per slab. Munoz estimates the cost of a typical job to include unit-level materials, $830; unit-level labor, $580; and an allocated portion of facility-level overhead, $1,30o. Required Calculate the contribution to profit from the special order. Should Munoz accept or reject the special order to pour 45 slabs for $2,650 each? Contribution to profit Should Munoz accept or reject the special order?
Benson Concrete Company pours concrete slabs for single-family dwellings. Lancing Construction Company, which operates outside Benson's normal sales territory, asks Benson to pour 43 slabs for Lancing's new development of homes. Benson has the capacity to build 310 slabs and is presently working on 230 of them. Lancing is willing to pay only $2,690 per slab. Benson estimates the cost of a typical job to include unit-level materials, $810; unit-level labor, $570; and an allocated portion of facility- level overhead, $1,380. Required Calculate the contribution to profit from the special order. Should Benson accept or reject the special order to pour 43 slabs for $2,690 each? Contribution to profit Should Benson accept or reject the special order?
Fanning Concrete Company pours concrete slabs for single-family dwellings. Lancing Construction Company, which operates outside Fanning’s normal sales territory, asks Fanning to pour 51 slabs for Lancing’s new development of homes. Fanning has the capacity to build 380 slabs and is presently working on 220 of them. Lancing is willing to pay only $2,580 per slab. Fanning estimates the cost of a typical job to include unit-level materials, $860; unit-level labor, $590; and an allocated portion of facility-level overhead, $1,200. Required Calculate the contribution to profit from the special order. Should Fanning accept or reject the special order to pour 51 slabs for $2,580 each?
In connection with surfacing a new highway, a contractor has a choice of two sites on which to set up the asphalt-mixing plant equipment. The contractor estimates that it will cost $2.75 per cubic yard mile (yd3-mile) to haul the asphalt-paving material from the mixing plant to the job location. Factors relating to the two mixing sites are as follows given in the shown table (production costs at each site are the same): The job requires 50,000 cubic yards of mixed-asphalt-paving material. It is estimated that four months (17 weeks of five working days per week) will be required for the job. Compare the two sites in terms of their fixed, variable, and total costs. Assume that the cost of the return trip is negligible. Which is the better site? For the selected site, how many cubic yards of paving material does the contractor have to deliver before starting to make a profit if paid $12 per cubic yard delivered to the job location?
Southern Tier Heating, Inc. installs heating systems in new homes built in the southern tier counties of New York state. Jobs are priced using the time and materials method. The president of Southern Tier Heating, EIwing, is pricing a job involving the heating systems for six houses to be built by a local developer. He has made the following estimates. Material cost $ 60,000 Labor hours 400 The following predictions pertain to the company’s operations for the next year. Labor rate, including fringe benefits $ 16.00 per hour Annual labor hours 12,000 hours Annual overhead costs: Material handling and storage $ 25,000 Other overhead costs $ 108,000 Annual cost of materials used $ 250,000 Perbanas adds a markup of $ 4 per hour on its time charges, but there is no markup on material costs. Required: 1. Calculate the company's time charges and the material charges percentage. 2. Compute the price for the job 3. What would be the price of the job if Perbanas also added a markup of 10 % on…
PERBANAS, Inc. installs heating systems in new homes built in the southern tier counties of New York state. Jobs are priced using the time and materials method. The president of PERBANAS, Fenturini, is pricing a job involving the heating systems for six houses to be built by a local developer. He has made the following estimates. Material cost $ 30,000 Labor hours 200 The following predictions pertain to the company’s operations for the next year. Labor rate, including fringe benefits $ 8.00 per hour Annual labor hours 6,000 hours Annual overhead costs: Material handling and storage $ 12,500 Other overhead costs $ 54,000 Annual cost of materials used $ 125,000 Perbanas adds a markup of $ 2 per hour on its time charges, but there is no markup on material costs. Required: 1. Calculate the company's time charges and the material charges percentage. 2. Compute the price for the job 3. What would be the price of the job if Perbanas also added a markup of 5 % on all material charges…
Old Camp Company manufactures awnings for its own line of tents. The company is currently operating at capacity and has received an offer from one of its suppliers to make the 10,000 awnings it needs for $18 each. Old Camp’s costs to make the awning are $7 in direct materials and $5 in direct labor. Variable manufacturing overhead is 80 percent of direct labor. If Old Camp accepts the offer, $32,000 of fixed manufacturing overhead currently being charged to the awnings will have to be absorbed by other product lines.Required:1. Complete the incremental analysis for the decision to make or buy the awnings in the table provided below. Make Buy Net Income Increase (Decrease) Direct Materials Direct Labor Variable OH Fixed OH Purchase Price Total 2. Should Old Camp continue to manufacture the awnings or should they purchase the awnings from the supplier?3. Assuming that the capacity released by purchasing the awnings…
In its production process, Purple Tree Inc uses a specialized part in the manufacturing of their fancy widget. The costs to make a part are: direct material, $15; direct labor, $27; variable overhead, $15; and applied fixed overhead, $32. Purple Tree has received a quote of $60 from a potential supplier for this part. If Purple Tree buys the part, 75 percent of the applied fixed overhead would continue. They need 12,000 units of the specialized part. Purple Tree Company would be better off by Group of answer choices $60,000 to buy the part. $348,000 to buy the part. $30,000 to manufacture the part. $216,000 to manufacture the part.

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