Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

problem: Jones Products manufactures & sells to wholesalers approximately 500,000 packages per year of underwater markers at 4 dollar per package. Yearly costs for the production & sale of this quantity are shown in the table.

Direct materials $ 640,000
Direct labor 160,000
Overhead 480,000
Selling expenses 200,000
Administrative expenses 133,000
Total costs and expenses $1,613,000
A new wholesaler has offered to purchase 83,000 packages for $3.44 each. These markers would be marketed under the wholesaler's & and would not affect Jones Products' sales through its normal channels. A study of the costs of this additional business reveals the following:

Direct materials costs are 100 percent variables.

Per unit direct labor costs for the additional units would be 50% higher than normal because their production would require overtime pay at one-and-one-half times the usual labor rate.

30 percent of the normal annual overhead costs are fixed at any production level from 450,000 to 600,000 units. The remaining 70% of the yearly overhead cost is variable with volume.

Accepting new business would involve no additional selling expenses.

Accepting new business would increase administrative expenses by a $4,000 fixed amount.

[A] Yearly operating income without the special order (column 1).
[B] Yearly operating income received from the new business only (column 2).
[C] Combined annual operating income from normal business & new business (column 3).
Jones PRODUCTS
Comparative Income Statements
(1) (2) (3)
Homework 

 Direct materials

$ 640,000

Direct labor

160,000

Overhead

480,000

Selling expenses

200,000

Administrative expenses

133,000

Total costs and expenses

$1,613,000

Direct materials

$ 640,000

A new wholesaler has offered to buy 83,000 packages for $3.44 each. These markers would be marketed under the wholesaler's name and would not affect Jones Products' sales through its normal channels. A study of the costs of this additional business reveals the following:

Direct materials costs are 100 percent variables.

Every unit direct labor costs for the additional units would be 50% higher than normal because their production would require overtime pay at one-and-one-half times the usual labor rate.

30% of the normal annual overhead costs are fixed at any production level from 450,000 to 600,000 units. The remaining 70 percent of the yearly overhead cost is variable with volume.

Accepting new business would involve no additional selling expenses.

Accepting new business would increase administrative expenses by a $4,000 fixed amount.

[A] Annual operating income without the special order (column 1).
[B] Annual operating income received from the new business only (column 2).
[C] Combined annual operating income from normal business and the new business (column 3).

Jones PRODUCTS
Comparative Income Statements
(1) (2) (3)
Homework

JONE PRODUCTS

COMPARATIVE INCOME STATEMENTS

 

Normal   Volume

New  Business

Combined

Sales

$

$

$

Costs and expenses:

 

 

 

Direct materials

 

 

 

Direct labor

 

 

 

Overhead

 

 

 

Selling expenses

 

 

 

Administrative expenses

 

 

 

Total costs and expenses

 

 

 

OPERATING INCOME

$

$

$

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M921568

Have any Question? 


Related Questions in Basic Finance

You have just performed a scenario analysis on a project

You have just performed a scenario analysis on a project, with the following results: Best Case: with a 35% probability, you get an NPV of $77 Base Case: with a 55% probability, you get an NPV of $24 Worst Case: with a 1 ...

Capital investment analysisbramer corporations controller

Capital Investment Analysis Bramer Corporation's controller, Mara, was asked to prepare a capital investment analysis for a robot-guided aluminum window machine. This machine would automate the entire window-casing manuf ...

1 present value of annuity what formula is used to

1. Present Value of Annuity. What formula is used to determine the present value of an annuity? What does the present value of an annuity indicate? 2. Future Value of Annuity. How would you modify the FVA equation to det ...

Please show solution without using excel with formulas

Please show solution WITHOUT using excel. With formulas. Thank you. Ford is about to issue a new corporate bond, face value= $1,000, coupon rate % (Annual), term to maturity= 4 years. You know that a very similar bond is ...

Our data- ow analyses so far do not take advantage of the

Our data- ow analyses so far do not take advantage of the semantics of conditionals. Suppose we find at the end of a basic block a test such as How could we use our understanding of what the test x

1 what are special allocations2 what causes the after-tax

1. What are special allocations? 2. What causes the after-tax IRR (ATIRRe) for the general partner to differ from that of the limited partner? 3. What is the significance of capital accounts? What causes the balance in a ...

1 the black-scholes-merton option pricing model assumes the

1. The Black-Scholes-Merton option pricing model assumes the stock price changes are lognormally distributed. Show graphically how this distribution changes when an investor is long the stock and short the call. 2 .The B ...

Cost of common equity with flotationbanyan cos common stock

Cost of Common Equity with Flotation Banyan Co.'s common stock currently sells for $42.00 per share. The growth rate is a constant 11.2%, and the company has an expected dividend yield of 3%. The expected long-run divide ...

1 tall trees inc is using the net present value npv when

1. Tall Trees, Inc. is using the net present value (NPV) when evaluating projects. You have to find the NPV for the company's project, assuming the company's cost of capital is 9.83 percent. The initial outlay for the pr ...

1 why do self-report scales use many different items that

1. Why do self-report scales use many different items that assess the same conceptual variable? 2. Consider a measure that shows high internal consistency but low test-retest reliability. What can be concluded about the ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro