Cost Accounting - Ch.17 Special Order Decisions Hi, Please help answer the bold
ID: 2426109 • Letter: C
Question
Cost Accounting - Ch.17 Special Order Decisions
Hi, Please help answer the bold blank. Thanks kindly! (please show work / round appropraitely)
Example: Ellis Company makes boxed stationery and has capacity for 100,000 boxes. Currently, Ellis is producing 80,000 boxes. Information on price and costs is as follows:
Round intermediate calculations to the nearest cent. Use rounded answers in subsequent computations, if required.
A gift store chain recently came to Ellis Company and asked to have 10,400 boxes of stationery printed at a price of $1.92 per box. If Ellis Company accepts the special order, operating income will be $2,496 higher.
Now suppose that the gift store chain requires that a special imprinted seal must be put on each box. Direct materials will increase by $0.07 per box and Ellis can rent the machinery to imprint the seals for $2,149. If Ellis Company accepts the special order with this new requirement, operating income will be $**BLANK ANSWER** lower.
Price $2.48 Direct materials $0.77 Direct labor 0.74 Variable overhead 0.17 Fixed overhead* 1.10 *Fixed overhead is based on capacity of 100,000 boxes.Explanation / Answer
special orderof 10400 boxes per unit Amount IN $ Revenue 1.92 19968 Direct Material 0.84 8736 Direct labour 0.74 7696 variable Overhead 0.17 1768 Rent Expense 2419 Loss -651 If Ellis accepts the new order with new requirement than the operating income will be lower by $651