Delta Screen Corporation is currently operating at 60% of capacity and producing 6,000 screens annually. The normal selling price is $750 per screen. They recently received an offer from a company in Germany to purchase 2,000 screens for $500 per unit. Delta has not previously sold products in Germany. Budgeted production costs for 6,000 and 8,000 screens follow:Units Produced 6,000 8,000 Direct Materials Cost $ 750,000 $ 1,000,000Direct Labor Cost 750,000 1,000,000Variable Overhead 900,000 1,200,000 Fixed Overhead 1,200,000 1,200,00 Total Cost 3,600,000 4,400,000Full Cost per Unit 600 550Delta’s marketing manager believes that although the price offered by the German customer is lower than current price, the order should be accepted to gain a foothold in the German market. The production manager, however, believes that the order should be rejected because the unit cost is higher than the price offered.If the president of Delta were to call on you to resolve the difference in opinion, what would you recommend? Explain.What is the minimum price for the special order if Delta is operating at full capacity?

Question

01-07-2021
Business

contestada

Delta Screen Corporation is currently operating at 60% of capacity and producing 6,000 screens annually. The normal selling price is $750 per screen. They recently received an offer from a company in Germany to purchase 2,000 screens for $500 per unit. Delta has not previously sold products in Germany. Budgeted production costs for 6,000 and 8,000 screens follow:Units Produced 6,000 8,000 Direct Materials Cost $ 750,000 $ 1,000,000Direct Labor Cost 750,000 1,000,000Variable Overhead 900,000 1,200,000 Fixed Overhead 1,200,000 1,200,00 Total Cost 3,600,000 4,400,000Full Cost per Unit 600 550Delta’s marketing manager believes that although the price offered by the German customer is lower than current price, the order should be accepted to gain a foothold in the German market. The production manager, however, believes that the order should be rejected because the unit cost is higher than the price offered.If the president of Delta were to call on you to resolve the difference in opinion, what would you recommend? Explain.What is the minimum price for the special order if Delta is operating at full capacity?

Respuesta :

Otras preguntas

After fertilization cells as seen here divide repeatedly. The next step in the development of a multicellular organism would be? A: cytokinesis B: cleavage C

what is the solution of the system of equations? y = –5x 6 y = –3x – 4 a. (–1.25, 12.25) b. (–19, 5) c. (–1, –1) d. (5, –19)

a microwave oven produces energy waves that are _____. longer than visible light shorter than visible light not part of the electromagnetic spectrum

Identify the subject: Take the elevator to the third floor and walk to room 102.

An insurance agent says the standard deviation of the total hospital charges for patients involved in a crash in which the vehicle struck a construction barrica

your friend bought 3 bags of wild bird seed and an $18 bird feeder. each bag of birdseed costs the same amount. if your friend spent $45, find the cost of one b

what is the value of the number 4 on 264,807

what volume of a 1.0 m hcl is required to completely neutralize 25.0 ml of a 1.0 m koh?

a weather balloon is inflated to a volume of 28.5 L at a pressure of 748 mmHg and a temperature of 28.0 degrees C. The balloon rises in the atmosphere to an alt

which structure is at work when the body deals with reflex actions?

amcool amcool · Answer 1 · 2021-07-02T05:03:46+02:00

Answer:

a. I would recommend the the special order should be accepted.

b. The minimum price for the special order is the current selling price of $750.

Explanation:

a. If the president of Delta were to call on you to resolve the difference in opinion, what would you recommend?

Because the existing data's format and findings are deceiving, I would suggest to the president to let us perform a differential analysis before making a recommendation.

Note: See the attached excel file for a analysis of accepting the order.

In the attached excel file, the following calculation is done:

Special order revenue = Difference revenue = Units of special order * Special order price per unit = 2,000 * $500 = $1,000,000

Revenue with the special order = Revenue without the special order + Special order revenue = $4,500,000 + $1,000,000 = $4,500,000

From the differential analysis in the attached excel, it can be observed that accepting the order will increase profit by $200,000.

Therefore, I would recommend the the special order should be accepted.

b. What is the minimum price for the special order if Delta is operating at full capacity?

Since other sales opportunities has be forgone if the special order is accepted if Delta is operating at full capacity, the minimum price for the special order must be or is the current selling price of $750.