CoolAir Corporation manufactures portable window air conditi…
CoolAir Corporation manufactures portable window air conditioners. CoolAir has the capacity to manufacture and sell 80,000 air conditioners each year but is currently only manufacturing and selling 60,000. The following per unit numbers relate to annual operations at 60,000 units: Per Unit Selling price $ 125 Manufacturing costs: Variable $ 25 Fixed $ 40 Selling and administrative costs: Variable $ 10 Fixed $ 15 The City of Clearwater would like to purchase 3,000 air conditioners from CoolAir but only if they can get them for $75 each. Variable selling and administrative costs on this special order will drop down to $2 per unit. This special order will not affect the 60,000 regular sales and it will not affect the total fixed costs. What is the annual financial advantage (disadvantage) for the company as a result of accepting this special order from the City of Clearwater?
Read DetailsThe Michael Scott Paper Company uses customers served as its…
The Michael Scott Paper Company uses customers served as its measure of activity. During February, the company budgeted for 35,000 customers, but actually served 34,000 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served: Revenue: $3.50q Wages and salaries: $33,200 + $1.10q Supplies: $0.50q Insurance: $10,400 Miscellaneous expense: $6,400 + $0.30q The company reported the following actual results for February: Revenue $119,800 Wages and salaries $68,000 Supplies $14,400 Insurance $10,400 Miscellaneous expense $17,700 Prepare the company’s flexible budget performance report for February. Label each variance as favorable (F) or unfavorable (U)
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