product at a price of $39 per unit. Bueno's current production and sales is as follows: Units produced & sold annually 10,000 Unit production capacity 14,000 Per unit Regular sales price $ 55.00 Direct Materials 20.00 Direct Labor 10.00 Variable Overhead 6.00 Fixed Overhead 2.00 a. What is the short- term change in Operating Income if Chido's special offer is accepted? b. Suppose that Bueno is operating at full capacity producing and selling 14,000 units per year. What is the Opportunity Cost if Chido's special offer is accepted? c. What non-financial factors should Bueno consider in deciding whether to accept/reject Chido's offer?

product at a price of $39 per unit. Bueno's current production and sales is as follows: Units produced & sold annually 10,000 Unit production capacity 14,000 Per unit Regular sales price $ 55.00 Direct Materials 20.00 Direct Labor 10.00 Variable Overhead 6.00 Fixed Overhead 2.00 a. What is the short- term change in Operating Income if Chido's special offer is accepted? b. Suppose that Bueno is operating at full capacity producing and selling 14,000 units per year. What is the Opportunity Cost if Chido's special offer is accepted? c. What non-financial factors should Bueno consider in deciding whether to accept/reject Chido's offer?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 6PA: Gent Designs requires three units of part A for every unit of Al that it produces. Currently, part A...

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Gent Designs requires three units of part A for every unit of Al that it produces. Currently, part A is made by Gent, with these per-unit costs in a month when 4.000 units were produced: Variable manufacturing overhead is applied at $1.00 per unit. The other $0.30 of overhead consists of allocated fixed costs. Gent will need 6,000 units of part A for the next years production. Cory Corporation has offered to supply 6,000 units of part A at a price of $7.00 per unit. It Gent accepts the offer, all of the variable costs and $1,200 of the fixed costs will be avoided. Should Gent Designs accept the offer from Cory Corporation?
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