44b0beb7e5bdb5c5a53048a3bdfd123b a2939ff21f8aa043ef2b4232f2dc6236
7.
Barker Company has a single product called a Zet. The company normally produces and sells 80,000 Zets each year at a selling price of $40 per unit. The company’s unit costs at this level of activity are given below:
Direct materials
$
9.50 Direct labor 10.00 Variable manufacturing overhead 2.80 Fixed manufacturing overhead 5.00
($400,000 total) Variable selling expenses 1.70 Fixed selling expenses 4.50
($360,000 total)
Total cost per unit
$
33.50
A number of questions relating to the production and sale of Zets are given below.
Each question is independent. Required:
1.
Assume that Barker Company has sufficient capacity to produce 100,000 Zets each year without any increase in fixed manufacturing overhead costs. The company could increase sales by 25% above the present 80,000 units each year if it were willing to increase the fixed selling expenses by $150,000.
a.
Calculate the incremental net operating income. (Negative amount should be indicated by a minus sign.)
Incremental net operating income
$170,000
b.
Would the increased fixed selling expenses be justified?
Yes
No
2.
Assume again that Barker Company has sufficient capacity to produce 100,000 Zets each year. The company has an opportunity to sell 20,000 units in an overseas market. Import duties, foreign permits, and other special costs associated with the order would total $14,000. The only selling costs that would be associated with the order would be $1.50 per unit shipping cost.
Compute the per unit break-even price on this order. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Break-even price per unit
$ 24.50
3.
One of the materials used in the production of Zets is obtained from a foreign supplier. Civil unrest in the supplier’s country has caused a cutoff in material shipments that is expected to last for three months. Barker Company has enough material
Barker Company has a single product called a Zet. The company normally produces and sells 80,000 Zets each year at a selling price of $40 per unit. The company’s unit costs at this level of activity are given below:
Direct materials
$
9.50 Direct labor 10.00 Variable manufacturing overhead 2.80 Fixed manufacturing overhead 5.00
($400,000 total) Variable selling expenses 1.70 Fixed selling expenses 4.50
($360,000 total)
Total cost per unit
$
33.50
A number of questions relating to the production and sale of Zets are given below.
Each question is independent. Required:
1.
Assume that Barker Company has sufficient capacity to produce 100,000 Zets each year without any increase in fixed manufacturing overhead costs. The company could increase sales by 25% above the present 80,000 units each year if it were willing to increase the fixed selling expenses by $150,000.
a.
Calculate the incremental net operating income. (Negative amount should be indicated by a minus sign.)
Incremental net operating income
$170,000
b.
Would the increased fixed selling expenses be justified?
Yes
No
2.
Assume again that Barker Company has sufficient capacity to produce 100,000 Zets each year. The company has an opportunity to sell 20,000 units in an overseas market. Import duties, foreign permits, and other special costs associated with the order would total $14,000. The only selling costs that would be associated with the order would be $1.50 per unit shipping cost.
Compute the per unit break-even price on this order. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Break-even price per unit
$ 24.50
3.
One of the materials used in the production of Zets is obtained from a foreign supplier. Civil unrest in the supplier’s country has caused a cutoff in material shipments that is expected to last for three months. Barker Company has enough material