Good Day- Can you please take a look and help explain some of the


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Good Day- Can you please take a look and help explain some of the topics? No rush. CW-CH-6.xlsx There are 3 problems this week. Click the tabs at the bottom of the spreadsheet to move to problems 2 and 3. Special Order Decision Lancaster Lighting Corp. produces a model of outdoor floodlight that normally sells for $15 per light. Sales per year are 500,000 units, and the production line is operating at 70% capacity. Lancaster has been presented with a special one-time export order for 40,000 lights at $11 per light. The $11 price is below the current total cost of production. Listed below are the costs based on the production of 500,000 units. There would be no increase in fixed costs by accepting this order, but there would be a one-time crating expense of $5,000. The special order would have no effect on the existing business, because it is being exported to a market that Lancaster does not normally serve. Prepare an incremental analysis and determine the effect of accepting the special order. Should Lancaster accept this order? Costs at 500,000 units of production: Direct labor Direct materials Variable manufacturing overhead Fixed manufacturing overhead Total manufacturing cost – ANALYSIS: 1. Calculate unit costs. Direct labor Direct materials Variable manufacturing overhead Fixed manufacturing overhead Total manufacturing cost 2. Calculate profit or loss on special order: Revenue Direct labor Direct materials Variable manufacturing overhead Crating cost Incremental costs Increase in net income per unit – – Per Unit 11.00 – 440,000 5,000 3. Yes, Lancaster should accept this order, because net income will increase by $45,000. 5,000 435,000 Make-Versus-Buy Decision Sports Equipment Unlimited makes and sells soccer goals and has sales of 20,000 units per year. The plant is operating at full capacity. A potential supplier has approached Sports Equipment Unlimited and offered to supply the soccer goals at a finished cost of $31.50 per goal. If the company buys rather than manufactures, they will be able to eliminate 60% of fixed manufacturing costs by leasing unused space. The current costs are as follows: Per Unit Direct labor Direct materials Variable manufacturing overhead Fixed manufacturing overhead Total manufacturing cost INSTRUCTIONS: Prepare an incremental analysis for the decision to make or buy the soccer goals. Show the cost of continuing to make and to buy the goals. Show the effect on net income if they buy. Should Sports Equipment Unlimited buy the goals? Make Direct labor Direct materials Variable manufacturing overhead Fixed manufacturing overhead Purchase cost Total manufacturing cost Buy – 630,000 630,000 Sports Unlimited should continue to manufacture the goals, even though the unit cost is higher than the purchase price. This is true because there will be some remaining fixed costs even if they buy. As we see, the net income will fall by $21,000 if Lancaster buys the goals. Change in Net Income (630,000) (630,000) Cash Budget Below is summary monthly income statement data for Ace Manufacturing Company. Sales revenue Direct materials purchases Direct labor Manufacturing overhead Selling and administrative expenses January 250,000 60,000 88,000 50,000 45,000 February 275,000 70,000 95,000 52,000 46,000 All sales are on account, and history has shown that 40% of sales are expected to be collected in the month of the sale, with 60% collected the following month. Direct materials are paid 50% in the month of purchase and 50% the following month. All other expenses are paid as incurred. All costs shown are cash-based costs (depreciation has already been eliminated). Other data: 1. December sales were $230,000. 2. Purchases of direct materials purchased in December were $50,000. 3. The company has interest payments due of $5,000 per month. 4. The cash balance on January 1 was $15,000. Instructions A. Prepare schedules for expected collections from customers and expected paymen

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