50.1K

Verified Solution

Link Copied!

please round final answers. if they contain pennies, round to the nearest penny

Samia Ltd. produces jewelry boxes for retail customers such as Walmart. One of their most popular products has the following selling price and costs: Dollar value Description per unit Selling price $65.00 Direct materials $13.00 Direct labour $11.70 Variable overhead $10.40 Fixed overhead $9.10 Sales commission $3.25 Income per unit $17.55 The company, due to the impact of a world-wide pandemic, is not at capacity. They also have some non-manufacturing fixed costs (such as sales and administration costs). They have provided the following details: Capacity (units) 28,000 Production (units) 22,400 Fixed non-manufacturing costs (annual) $98,280 Zunish Ltd., who has not bought from Samia Ltd. before, has offered to buy jewelry boxes for a special event that Zunish is managing. Zunish Ltd. is from a geographic region outside the area normally serviced by Samia Ltd. Zunish Ltd. has agreed to pay the transportation costs. In addition, because no sales person was involved, there will be no sales commission paid on this sale. Other details of Zunish's offer are as follows: Other details of Zunish's offer are as follows: Total units required 4,200 Purchase price per unit $37.00 Transportation costs / unit $1.60 Use the above information to answer the following questions. If Samia Ltd. accepts this order, will operating income increase, decrease or stay the same? a) Stay the same b) Increase c) Decrease By how much will operating income change if the order is accepted? Enter your answer as a positive number. Assume, INSTEAD, that the order from Zunish Ltd. was obtained through a sales person so sales commission has to be paid. In addition, Zunish Ltd. has asked Samia Ltd. to pay all transportation costs. Given this new information, will Samia's operating income increase, decrease or stay the same? a) Decrease b) Increase OC) Stay the same Given this new information, by how much will operating income change if the order was accepted now? Enter your answer as a positive number. A/ What qualitative factors support accepting the order from Zunish Ltd.? Choose all that apply. a) May have a negative impact on regular business. b) Improve employee moral. c) Reduction in idle capacity. d) Increase the company's brand awareness in the current geographical region. e) Reduce need to lay off employees

Answer & Explanation Solved by verified expert

See Answer