Question

Exhibit 1 WePRINT COMPANY Summary of Monthly Operating Costs Monthly costs at 150,000 volume Manufacturing costs: Direct material - variable $ 4,500 Direct labor - variable 1,500 Direct labor - fixed 3,000 Manufacturing overhead - variable 1,500 Manufacturing overhead - fixed 3,375 Total manufacturing costs $15,375 Nonmanufacturing costs: Sales - variable 1,500 Sales - fixed 1,875 Corporate - fixed 3,750 Total nonmanufacturing costs Total costs $ 7,125 $22 500 ,. 1. Consider the special order from Abbie Philips. a. WePrint currently is operating at around full capacity: 150,000 brochures. Should Wilson accept the special order and what would be the dollar impact on Operating Income if the order was accepted

Answer 1

Question Completion:

Abbie Phillips has a special order for 100 prints at $10.

Answer:

WePRINT COMPANY

Since the company has not reached full capacity, it should accept the order. It will bring in an additional revenue of $1,000 and an additional operating income of $995.

Step-by-step explanation:

a) Data and Calculations:

Summary of Monthly Operating Costs

Monthly costs at 150,000 volume

Manufacturing costs:

Direct material - variable $ 4,500

Direct labor - variable 1,500

Direct labor - fixed 3,000

Manufacturing overhead - variable 1,500

Manufacturing overhead - fixed 3,375

Total manufacturing costs $15,375

Nonmanufacturing costs:

Sales - variable 1,500

Sales - fixed 1,875

Corporate - fixed 3,750

Total nonmanufacturing costs $ 7,125

Total costs $22 500

Manufacturing costs: 150,000 Per Unit Relevant Cost/Unit

Direct material - variable $ 4,500 $0.03 $0.03

Direct labor - variable 1,500 0.01 0.01

Direct labor - fixed 3,000 0.02

Manufacturing overhead - variable 1,500 0.01 0.01

Manufacturing overhead - fixed 3,375 0.02

Total manufacturing costs $15,375 0.09 0.05

Nonmanufacturing costs:

Sales - variable 1,500 0.01

Sales - fixed 1,875 0.01

Corporate - fixed 3,750 0.03

Total nonmanufacturing costs $ 7,125 0.05

Total costs $22 500 0.14 0.05