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Category > Business & Finance Posted 23 May 2017 My Price 7.00

Calla Company produces skateboards that sell for $61 per unit

Calla Company produces skateboards that sell for $61 per unit. The company currently has the capacity to produce 90,000 skateboards per year, but is selling 81,800 skateboards per year. Annual costs for 81,800 skateboards follow.

 

     
Direct materials $ 883,440
Direct labor   744,380
Overhead   956,000
Selling expenses   544,000
Administrative expenses   477,000
 
Total costs and expenses $ 3,604,820
 

 

A new retail store has offered to buy 8,200 of its skateboards for $56 per unit. The store is in a different market from Calla's regular customers and it would not affect regular sales. A study of its costs in anticipation of this additional business reveals the following:
%u2022   Direct materials and direct labor are 100% variable.
%u2022  

40 percent of overhead is fixed at any production level from 81,800 units to 90,000 units; the remaining 60% of annual overhead costs are variable with respect to volume.
%u2022  

Selling expenses are 70% variable with respect to number of units sold, and the other 30% of selling expenses are fixed.
%u2022   There will be an additional $1.8 per unit selling expense for this order.
%u2022   Administrative expenses would increase by a $800 fixed amount.

 

Required:
Prepare a three-column comparative income statement that reports the following:
a. Annual income without the special order.
b. Annual income from the special order.
c. Combined annual income from normal business and the new business.
(Round your answers to the nearest dollar amount. Omit the "$" sign in your response.)

 

CALLA COMPANY
COMPARATIVE INCOME STATEMENTS
  (a)
Normal
Volume		 (b)
New
Business		 (c)

Combined
  $   $
Costs and expenses      
       
       
       
       
       
 
Total costs and expenses      
 
Operating income $ $ $
 

Answers

Alpha Geek
(8)
Status NEW Posted 23 May 2017 06:05 PM My Price 7.00

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file 1495562561-Answer.docx preview (276 words )
C-----------all-----------a C-----------omp-----------any----------- pr-----------odu-----------ces----------- sk-----------ate-----------boa-----------rds----------- th-----------at -----------sel-----------l f-----------or -----------$61----------- pe-----------r u-----------nit-----------. T-----------he -----------com-----------pan-----------y c-----------urr-----------ent-----------ly -----------has----------- th-----------e c-----------apa-----------cit-----------y t-----------o p-----------rod-----------uce----------- 90-----------,00-----------0 s-----------kat-----------ebo-----------ard-----------s p-----------er -----------yea-----------r, -----------but----------- is----------- se-----------lli-----------ng -----------81,-----------800----------- sk-----------ate-----------boa-----------rds----------- pe-----------r y-----------ear-----------. A-----------nnu-----------al -----------cos-----------ts -----------for----------- 81-----------,80-----------0 s-----------kat-----------ebo-----------ard-----------s f-----------oll-----------ow.----------- D-----------ire-----------ct -----------mat-----------eri-----------als----------- $ -----------883-----------,44-----------0 -----------Dir-----------ect----------- la-----------bor----------- 74-----------4,3-----------80 ----------- Ov-----------erh-----------ead----------- 95-----------6,0-----------00 ----------- Se-----------lli-----------ng -----------exp-----------ens-----------es -----------544-----------,00-----------0 -----------Adm-----------ini-----------str-----------ati-----------ve -----------exp-----------ens-----------es -----------477-----------,00-----------0 ----------- -----------Tot-----------al -----------cos-----------ts -----------and----------- ex-----------pen-----------ses----------- $ -----------3,6-----------04,-----------820----------- ----------- ----------- ----------- A----------- ne-----------w r-----------eta-----------il -----------sto-----------re -----------has-----------
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