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will be incurred. Unit costs to make and sell this product are as follows:
direct materials, $100; direct labor, $50; variable manufacturing
overhead, $14; fixed manufacturing overhead, $10.
2a. List the relevant costs for the decision of whether or not to accept the
special order.
2b. What will be the change (difference) in operating income if Extreme
Sports accepts the special order?
c. Should Extreme Sports accept the special order? Why or why not?
3. Totally Technology manufactures two product lines: Cameras and
Video Recorders. The company's product line income statement follows:
Management is considering discontinuing the Video Recorder product
line. Accountants for the company estimate that discontinuing the Video
Recorder line will decrease fixed cost of goods sold by $10,000 and
fixed marketing and administrative expenses by $4,000.
repare an analysis supporting your opinion about whether or not the
Video Recorder product line should be discontinued.
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ACCT 346 Week 6 Homework Assignment
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1. Cave Hardware's forecasted sales for April, May, June, and July are
$200,000, $230,000, $190,000, and $240,000, respectively. Sales are
65% cash and 35% credit, with all accounts receivable collected in the
month following the sale. Cost of goods sold is 75% of sales and ending
inventory is maintained at $60,000 plus 10% of the following month's