1. Calculate the variable manufacturing costs per unit, the variable nonmanufacturing costs per unit, and the total variable costs per unit. Calculate the total manufacturing fixed costs, total nonmanufacturing fixed costs, and total fixed costs.
Special order problems
2. Assume current sales volume is 125,000 brochures. Should we accept Jenkins order for 25,000 brochures? [Assume that this would not affect any of Fine Print's current business with its regular customers.] What is the change (increase or decrease) in net income if we choose to accept the special order?
Assuming the current sales volume is 125,000 brochures it would result in total ...view middle of the document...
Should we accept Jenkins order for 25,000 brochures? [Note: This means that we would lose sales of 25,000 brochures from our regular customers.] What is the change (increase or decrease) in net income if we choose to accept the special order?
With the current sales volume of 150,000 brochures we should not accept Jenkins order for 25,000. Taking this particular order would decrease Net Income by $1,500 because of decreased sales revenue from $17 to $10 per 100 brochures for the 25,000 units for the Jenkins order.
*Total costs are $250 less with the Jenkins order due to decreased variable sales expenses that are eliminated by taking the Jenkins order
5. What additional information might influence the company’s decision to accept this special order?
Additional information that may influence the company to accept the special order would be if this particular sale would increase future sales. Jenkins made it clear that this would more than likely be a onetime purchase for their company but if a sale of this nature could increase sales from other firms it may be in the interest of FinePrint to accept the offer. Another alternative is if there were some way for FinePrint to decrease the direct material variable costs by 15% it would result in an increase in net income under the circumstances in question 3. Since Jenkins is already expecting a lesser product by going with another company if FinePrint was able to reduce its print...