ACC 311 Module 3 Problem Set 1-5
Question 1 of 5 > 15/15 =
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The management team of Crane Industries was evaluating its performance for the first half of the year. Production and sales of its fans
were on budget at 2,900 units to date, with the following income statement reflecting its income for the first half of the year.
Sales $258,100
Variable costs:
DM $46,400
DL 26,100
Variable-MOH 8,700
Variable selling 8,700 89,900
Contribution margin 168,200
Fixed costs:
Fixed-MOH 38,000
Fixed selling 114,000 152,000
Operating income (loss) $16,200
Orders for the second half of the year were coming in slower than what the company had been expecting. When a new customer
called and requested a special discount, the sales team listened.
, Assume the customer requests 220 units in the special order and offers $55 per unit. Since the customer came directly to the
company, no variable selling cost will be incurred. How much better or worse off will Crane Industries be f it accepts this special
order, assuming it has enough idle capacity for the order?
Crane Industries
would be | better off v‘ ws[ 5940 | by accepting
this order.
eTextbook and Media
Solution
Crane Industries accepts the special order, it will need to consider the incremental sales (i.e., benefits) and costs
Incremental revenue $55 Per unit
Less: Incremental costs
DM ($46,400 + 2,900 units) 16 Perunit
DL ($26,100 + 2,900 units) 9 Perunit
Variable-MOH ($8,700 + 2,900 units) 3 Perunit
New contribution margin $27 Perunit
xVolume 220 units
Total new contribution margin $5.940
The company would be better off by $5,940 by accepting this order.
Question 1 of 5 > 15/15 =
View Policies
Show Attempt History
The management team of Crane Industries was evaluating its performance for the first half of the year. Production and sales of its fans
were on budget at 2,900 units to date, with the following income statement reflecting its income for the first half of the year.
Sales $258,100
Variable costs:
DM $46,400
DL 26,100
Variable-MOH 8,700
Variable selling 8,700 89,900
Contribution margin 168,200
Fixed costs:
Fixed-MOH 38,000
Fixed selling 114,000 152,000
Operating income (loss) $16,200
Orders for the second half of the year were coming in slower than what the company had been expecting. When a new customer
called and requested a special discount, the sales team listened.
, Assume the customer requests 220 units in the special order and offers $55 per unit. Since the customer came directly to the
company, no variable selling cost will be incurred. How much better or worse off will Crane Industries be f it accepts this special
order, assuming it has enough idle capacity for the order?
Crane Industries
would be | better off v‘ ws[ 5940 | by accepting
this order.
eTextbook and Media
Solution
Crane Industries accepts the special order, it will need to consider the incremental sales (i.e., benefits) and costs
Incremental revenue $55 Per unit
Less: Incremental costs
DM ($46,400 + 2,900 units) 16 Perunit
DL ($26,100 + 2,900 units) 9 Perunit
Variable-MOH ($8,700 + 2,900 units) 3 Perunit
New contribution margin $27 Perunit
xVolume 220 units
Total new contribution margin $5.940
The company would be better off by $5,940 by accepting this order.
