Question lahore cornpany has received a special order for, Ask an Expert

Accounting

Question: Lahore Cornpany has received a special order for photo equipment it does not normally produce. The company has excess capacity, and the order could be manufactured without reducmg production of the firm's its regular products Discuss the relevance of each of the following items in computing the cost of special order

1. Equipment to be used in producing the order has a book value of Rs 2,000. The equipment has no other use for Lahore Company. If the order is not accepted, the equipment will be sold for Rs 1,500. If the equipment is used in producing the order It can be sold in three months for Rs 800.

2. If the special order is accepted, the operation will require some of the storage space In the company's plant. If the space is used for this purpose, the company will rent storage space temporarily in a nearby warehouse at a cost of Rs 18,000. The Building depreciation allocated to the storage space to be used in producing the special order is Rs 12,000.

3. In the special order is accepted it will require a sub assembly. Lahore company can purchase the sub assembly for rupees 24 per unit from and outside supplier or make it for rupees 30 per unit the cost per unit was determined as follows

Direct Material Cost rs 10

Direct Labour Cost rs 6

Variable Overhead rs 6

Allocated Fixed Overhead rs 8

Total Unit cost rs 30

View complete question

Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M92573803

Have any Question?Write your Review or question?

Related Questions in Accounting Basics

Question household budget1create a simple household budget

Question: Household Budget 1. Create a simple household budget, including all income and expenses. There are various templates available online to help you do this. Find one that you feel comfortable with and that fits y ...

Question - ethics classification of income statement

Question - ETHICS (Classification of Income Statement Items) As audit partner for Grupo and Rijo, you are in charge of reviewing the classification of unusual items that have occurred during the current year. The followi ...

Question - given1 purchased land for 12500 cash2 acquired

Question - Given 1. Purchased land for $12,500 cash. 2. Acquired $40,000 cash from the issue of common stock. 3. Received $79,000 cash for providing services to customers. 4. Paid cash operating expenses of $40,500. 5. B ...

Question - you would like to purchase a car with a list

Question - You would like to purchase a car with a list price of $30,000, and the dealer offers financing over a five-year period at 8%. If you decide to trade in your current car to help reduce the amount of financing r ...

Question - on june 15 richwood township decided to withdraw

Question - On June 15, Richwood Township decided to withdraw $3,035,000 for a capital projects payment. At the date of the withdrawal, the fair value of the Treasury notes had increased by $32,500. Assume that the trust ...

Question - nancy gives her grandson sean 20 acres of land

Question - Nancy gives her grandson, Sean, 20 acres of land. Her tax basis in the land is $25,000. Nancy's marginal tax rate for the current year is 45%; her grandson's is 25%. Its fair market value was $575,000 at the d ...

Question - given2018 pretax accounting income 4000002018

Question - Given 2018 Pretax Accounting Income: $400,000 2018 Municipal Bond Interest Income Included in Pretax Accounting Income: $20,000 2018 Warranty Expense of $70,000 for Accounting Purposes 2018 Actual Warranty Cos ...

Question - during the past few years abc company has taken

Question - During the past few years, ABC Company has taken out the following loans from the bank: 1. On August 1, 2017, ABC Company borrowed $18,000 on a 9%, 11-month note payable. 2. On February 1, 2018, ABC Company bo ...

Question the availability of funds effects the capital

Question: The availability of funds effects the capital budgeting decisions. The amount of funds available for capital expenditures will be either limited or unlimited. Funds would be considered unlimited when a firm is ...

Question - what are the steps to obtain the expected stock

Question - What are the steps to obtain the expected stock price 5 years from now if stock is currently selling for $62.8 per share? The dividend is projected to increase at a constant rate of 7.5% per year. Required rat ...

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

Recent Questions

Ask Accounting Basics Expert