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Should St. Tropez accept either special order?

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Should St. Tropez accept either special order? Justify your answer and show your calculations…. 1 answer below » Should St. Tropez accept either special order? Justify your answer and show your calculations. (Hint: Distinguish between variable and fixed overhead.) Document Preview: 20000
7500

100
2000000
85
637500

67.5

32.5

35
700000
43
322500

30
600000
30
225000

12

10
200000
20
150000

87
1500000
93
697500

13
500000
-8
-60000

100

35

30

10

75

43

30

20

93

Sales
Less Manufacturing cost
Gross Margin
Accounting 2270
Materials
Direct labor
Regular Selling Price per Unit
Lyron View complete question » Should St. Tropez accept either special order? Justify your answer and show your calculations. (Hint: Distinguish between variable and fixed overhead.) Document Preview: 20000
7500

100
2000000
85
637500

67.5

32.5

35
700000
43
322500

30
600000
30
225000

12

10
200000
20
150000

87
1500000
93
697500

13
500000
-8
-60000

100

35

30

10

75

43

30

20

93

Sales
Less Manufacturing cost
Gross Margin
Accounting 2270
Materials
Direct labor
Regular Selling Price per Unit
Lyron Special Order
0.50 at (euro) 40
Total Manufacturing Cost ( total cost per unit)
Avignon Special Orders
Andrea Martin, Reeta Odish, Iwona Jedrzejczaki
Question 1. Should St. Tropez accept either special order? Justify your answer and show your calculations ( Hint: Distinguish between Variable and Fix Overhead)
Chapter 5 Group 2 page 217-218
On B 9 the Total Raw Material for Lyron is 67.5 and the special order requires less expensive raw material which is 67.5 minus 32.5 equal 35
Total Raw Material
Variable
Fixed
Manufacturing Overhead
Total Manufacturing Overhead
Less Required Special Order Case
0.50 at (euro) 24
St. Tropez S.A. manufactures several different styles of jewelry cases in southern France.
Management estimates that during the second quarter of 20X1 the company will be operating at 80%
of normal capacity. Because the company desires a higher utilization of plant capacity, it will consider
a special order.
St. Tropez has received special-order inquiries from two companies. The first is from Lyon, which
would like to market a jewelry case similar to one of St. Tropez’s cases. The Lyon jewelry case
would be marketed under Lyon’s own label. Lyon has offered St. Tropez E67.5 per jewelry case for
20,000 cases to be shipped by July 1 , 20X1 . The cost data for the St. Tropez jewelry case, which
would be similar to the specifications of the Lyon special order, are as follows:
Cost per Unit:
Raw Materials
Direct labors 0.50 per hour at 60 euros
Over head, 25 machine hour at 40 euros
Total cost per unit
According to the specifications provided by Lyon, the special-order case requires less expensive
raw materials, which will cost… Attachments: Q-Attachment…..xlsx View less » Jul 29 2015 10:09 AM


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