3. Adjusting entries and financial statements. The following information pertains to Fixation… The company previously collected $1,500 as an advance payment for services to be rendered in the future. By the end of December, one third of this amount had been earned. Fixation provided $2,500 of services to Artech Corporation; no billing had been made by December 31.
3. Adjusting entries and financial statements. The following information pertains to Fixation…
The company previously collected $1,500 as an advance payment for services to be rendered in the future. By the end of December, one third of this amount had been earned.
Fixation provided $2,500 of services to Artech Corporation; no billing had been made by December 31.
Sales Price $68
Variable manufacturing cost $42
Fixed manufacturing cost ($600,000 50,000) 12 54
Profit per unit $14
The company received a proposal from Pear Company to buy 10,000 units of Washington Company’s product for $49 per unit. This is a one-time only order and acceptance of this proposal will not affect the company’s regular sales. The president of Washington Company is reluctant to accept the proposal because he is concerned that the company will lose money on the special order.
Instructions
Prepare a schedule reflecting an incremental analysis of this proposal and indicate the effect the acceptance of this order might have on the company’s income.
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