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

Assume that you are nearing graduation and have applied for

Assume that you are nearing graduation and have applied for a job with a local bank. The bank's evaluation process requires you to take an examination that covers several financial analysis techniques. The first section ...

Segmented markets theory suppose that the treasury decides

Segmented Markets Theory: Suppose that the Treasury decides to finance its deficit with mostly longterm funds. How could this decision affect the term structure of interest rates? If short-term and long-term markets were ...

Effectiveness of monetary policy what circumstances might

Effectiveness of Monetary Policy : What circumstances might cause a stimulative monetary policy to be ineffective?

Is there a relationship between x rate of poverty measured

Is there a relationship between (X) rate of poverty (measured as percent of population below poverty level) and (Y) rates of teen pregnancy (measured per 1,000 females aged 15 to 17)? A researcher selected random states ...

How is a surplus in the current account related to a

How is a surplus in the current account related to a deficit in the capital account? How is a deficit in the current account related to a surplus in the capital account?

1 the beta 079 for network service provider verisign inc

1. The β = 0.79 for network service provider VeriSign, Inc. (VRSN), and β = 1.34 for video game supplier Electronic Arts Inc. (ERTS). If the market return is expected to be 10% and the risk-free rate is 4%, calculate the ...

Financial statement analysisthe following information

Financial Statement Analysis The following information relates to Harris Corporation. Account Current year Prior year Net sales (all credit) $520,125 $499,500 Cost of goods sold $375,960 $353,600 Gross profit $144,165 $1 ...

Finance reporton the 4th of october 2016 the reserve bank

Finance Report On the 4th of October 2016, the Reserve Bank of Australia (RBA) board will meet to discuss domestic and global economic conditions and release its monetary policy statement, having decided upon the appropr ...

Convex mechanical supplies produces a product with the

Convex Mechanical Supplies produces a product with the following costs as of July 1, 20X1:     Material $ 5 Labor 3 Overhead 2   $ 10  Beginning inventory at these costs on July 1 was 6,700 units. From July 1 to December ...

What is diversificationwhat is the expected return to a

What is diversification? What is the expected return to a portfolio that is composed of a variety of financial assets?

  • 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

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate