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    Fineprint Computation

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    ettmba
    This document analyzes three alternatives for a company considering a special order of 25,000 brochures at $10 per 100 brochures. Alternative 1 is to not accept the special order. Alternative 2 is to accept the order and use remaining capacity for normal production. Alternative 3 is similar to Alternative 2 but also considers additional potential orders. The document compares the costs, revenues, contribution margins and operating incomes for each alternative. Key factors like volume, selling price, variable and fixed costs are outlined to calculate the financial impacts.

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    Fineprint Computation

    Uploaded by

    ettmba
    3 views10 pages
    This document analyzes three alternatives for a company considering a special order of 25,000 brochures at $10 per 100 brochures. Alternative 1 is to not accept the special order. Alternative 2 is to accept the order and use remaining capacity for normal production. Alternative 3 is similar to Alternative 2 but also considers additional potential orders. The document compares the costs, revenues, contribution margins and operating incomes for each alternative. Key factors like volume, selling price, variable and fixed costs are outlined to calculate the financial impacts.

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    Fineprint computation.xlsx

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    This document analyzes three alternatives for a company considering a special order of 25,000 brochures at $10 per 100 brochures. Alternative 1 is to not accept the special order. Alternative 2 is to accept the order and use remaining capacity for normal production. Alternative 3 is similar to Alternative 2 but also considers additional potential orders. The document compares the costs, revenues, contribution margins and operating incomes for each alternative. Key factors like volume, selling price, variable and fixed costs are outlined to calculate the financial impacts.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    3 views10 pages

    Fineprint Computation

    Uploaded by

    ettmba
    This document analyzes three alternatives for a company considering a special order of 25,000 brochures at $10 per 100 brochures. Alternative 1 is to not accept the special order. Alternative 2 is to accept the order and use remaining capacity for normal production. Alternative 3 is similar to Alternative 2 but also considers additional potential orders. The document compares the costs, revenues, contribution margins and operating incomes for each alternative. Key factors like volume, selling price, variable and fixed costs are outlined to calculate the financial impacts.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    of 10

    ANALYSIS

    Alternative 1

    Normal Production per Month

    Cost per
    100 Brochures

    Sales

    Accept the order of 25,000 brochures @ $10 per 100 brochures

    Monthly costs at
    150,000 volume

    Normal
    125,000 volume @ $17

    Order
    25,000 volume@ $10

    25,500.00

    21,250.00

    2,500.00

    4.00 $
    1.00
    2.00
    1.00
    2.25

    6,000.00
    1,500.00
    3,000.00
    1,500.00
    3,375.00

    5,000.00
    1,250.00
    2,500.00
    1,250.00
    2,812.50

    1,000.00
    250.00
    500.00
    250.00
    562.50

    10.25 $

    15,375.00

    12,812.50

    2,562.50

    Manufacturing Costs
    Direct material-variable
    Direct labor-variable
    Direct labor-fixed
    Manufacturing overhead-variable
    Manufacturing overhead-fixed
    Total manufacturing costs
    Nonmanufacturing costs
    Sales-variable
    Sales-fixed
    Corporate-fixed
    Total nonmanufacturing costs
    Total Costs
    Net Revenue

    1.00
    1.25
    2.50
    $
    $

    1,500.00
    1,875.00
    3,750.00

    1,250.00
    1,562.50
    3,125.00

    312.50
    625.00

    4.75 $
    15.00 $

    7,125.00
    22,500.00

    $
    $

    5,937.50
    18,750.00

    $
    $

    3,000.00

    2,500.00

    $(1,000.00)
    1,500.00

    Percentage of decrease in Revenue

    937.50
    3,500.00

    50%

    Notes:

    lternative 1

    Alternative 2

    ochures @ $10 per 100 brochures

    Accept the order of 25,000 brochures @ $10 per 100 brochures through Outsourcing

    Normal
    150,000 volume

    00 volume@ $10

    Bradley Offer
    25,000 volume@ $2
    Opportunity Cost

    25,500.00

    6,000.00
    1,500.00
    3,000.00
    1,500.00
    3,375.00

    15,375.00

    1,500.00
    1,875.00
    3,750.00

    $
    $

    7,125.00
    22,500.00

    $
    $

    3,000.00

    Percentage of increase in Revenue

    500.00

    500.00
    3,500.00
    17%

    Alternative 3

    Accept the order of 25,000 brochures @ $10 per 100 brochures through Outsourcing

    Normal
    150,000 volume

    Abbie Jerkins Orders


    Other orders
    Bradley Offer
    25,000 volume@ $2
    5000 volume @ $9
    Opportunity Cost

    25,500.00 $

    6,000.00 $
    1,500.00
    3,000.00
    1,500.00
    3,375.00

    15,375.00 $

    1,500.00
    1,875.00
    3,750.00

    500.00

    450.00

    $
    $

    7,125.00 $
    22,500.00 $

    3,000.00

    Percentage of increase in Revenue

    500.00

    450.00
    3,950.00
    32%

    ANALYSIS
    Manufacturing Costs
    Direct material-variable
    Direct labor-variable
    Direct labor-fixed
    Manufacturing overhead-variable
    Manufacturing overhead-fixed
    TOTAL
    Volume Capacity

    $
    $
    $
    $
    $
    $

    6,000.00
    1,500.00
    3,000.00
    1,500.00
    3,375.00
    15,375.00

    Sales-variable
    Sales-fixed
    Corporate-fixed

    $
    $
    $

    1,500.00
    1,875.00
    3,750.00

    TOTAL
    Volume Capacity

    7,125.00

    Variable Manufacturing cost per 100 brochure


    Fixed Manufacturing cost per 100 brochure
    Nonmanufacturing costs

    Variable Non-Manufacturing cost per 100 brochure


    Fixed Non-Manufacturing cost per 100 brochure

    Variable
    $
    $
    $
    $

    per 100 brochure

    6,000.00
    1,500.00

    $
    $
    $
    1,500.00 $
    $
    9,000.00
    150,000

    Fixed

    4.00
    1.00
    - $
    1.00
    - $
    $

    per 100 brochure

    $
    $
    3,000.00 $
    $
    3,375.00 $
    6,375.00
    ###

    2.00
    2.25

    6.00
    4.25

    1,500.00

    1,500.00
    150,000

    $
    $
    $

    1.00
    - $
    - $
    $

    $
    1,875.00 $
    3,750.00 $

    1.25
    2.50

    5,625.00
    ###

    1.00
    $

    3.75

    Alternative 1
    Do not accept the special order of 25,000 brochures, instead use the 25,000 capacity to produce n
    Number of brochures

    100

    150,000

    Sales
    Variable manufacturing costs
    Variable nonmanufacturing costs

    17.00
    6.00
    1.00

    25,500.00
    9,000.00
    1,500.00

    Contribution Margin

    10.00

    15,000.00

    4.25
    3.75

    6,375.00
    5,625.00

    2.00

    3,000.00

    Fixed manufacturing costs


    Fixed nonmanufacturing costs

    Operating Income

    Alternative 2
    Accept the 25,000 special orders and use remaining capacity of 125,000 to produce normal orders
    Number of brochures
    Selling price

    100

    Sales
    Variable manufacturing costs
    Variable nonmanufacturing costs
    Contribution Margin
    Fixed manufacturing costs
    Fixed nonmanufacturing costs
    Operating Income

    125,000
    17

    6.00
    1.00

    21,250.00
    7,500.00
    1,250.00

    10.00

    12,500.00

    4.25
    3.75

    5,312.50
    4,687.50

    2.00

    2,500.00

    e the 25,000 capacity to produce normal orders

    125,000 to produce normal orders


    25,000
    10
    2,500.00
    1,500.00
    250.00
    750.00
    1,062.50
    937.50
    (1,250.00)

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