Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. benjamin company had the following results of oper

Benjamin Company had the following results of operations for the past year: Sales (11,300 units at $19) $ 214,700 Direct...

Free

70.2K

Verified Solution

Question

Accounting

Benjamin Company had the following results of operations for thepast year:

Sales (11,300 units at $19)$214,700
Direct materials and direct labor$56,500
Overhead (20% variable)11,300
Selling and administrative expenses (all fixed)13,560(81,360)
Operating income$133,340


A foreign company (whose sales will not affect Benjamin’s market)offers to buy 2,825 units at $15.20 per unit. In addition tovariable manufacturing costs, selling these units would increasefixed overhead by $960 and selling and administrative costs by$780. Assuming Benjamin’s productive capacity is 11,300 units peryear and accepts the offer, its profits will:

  • Decrease by $10,735.

  • Decrease by $12,475.

  • Decrease by $ 122,605.

  • Increase by $ 8,995.

  • Increase by $ 3,605.

Answer & Explanation Solved by verified expert
3.8 Ratings (422 Votes)

Correct answer-----------Decrease by $12,475

Working

financial advantage (disadvantage) of accepting the special order
Additional Revenue from offer (2825 x $15.20) $        42,940.00
Less: Total Additional cost due to acceptance of offer $        55,415.00
Financial Disadvantage $      (12,475.00)

.

Calculation of Additional Cost of Order of 2825 units
Per Unit Total
Direct material and labor $                   5.00 $          14,125.00
Variable manufacturing overheads   $                   0.20 $                565.00
Loss of contribution on regular sales ((19-5-.20)*2825) $                13.80 $          38,985.00
Additional fixed cost $            1,740.00
Total Additional cost due to acceptance of order $                19.00 $          55,415.00

If order is accepted then regular sales of 2825 will be lost because the company is operating at maximum capacity and there is no free capacity.
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

What DNA products would be generated if one of the proteins including DNA polymerase, DNA ligase,...

Biology
Q

1. What are the two targets of positive feedback from the common pathway in blood clotting?...

Medical Sciences
Q

What are the export strategies regarding product direct or indirect?Explain international business subject and please i need...

General Management
Q

Instructions: Read the Grand View Grocers Corporation case below. Grand View Grocers Corporation, headquartered in Clewiston, Florida, is...

General Management
Q

83 A 1 2 3 Phases of m whiteboard Complete the fo Place the sket...

Biology
Q

8 Sketch a graph of the following function Be sure to include all asymptotes increasing...

Basic Math
Q

9 Find the area between the curves y sketch of the curves and shade the...

Calculus
Q

The sales of this product are most llkely to be affected by an economic slowdown....

Accounting
Q

federal law prohibits the state taxation of which of the following. private pension income, military...

Accounting
Q

Outflows of cash or other resources from a business to its owners: Multiple Choice Reduce...

Accounting
Q

None of the above 5 points 15. A firm had a current ratio of 2,...

Accounting
Q

Harley Davidson manufactures 30 custom-made, luxury-model motorcycles. Does it account for these motorcycles as 30...

Accounting