Math Problems Speech or Presentation Example | Topics and Well Written Essays - 1500 words

Math Problems - Speech or Presentation Example Budgeted factory overhead is $400,000 for the current year. Of this amount, $100,000 is fixed. Of the $18,000 of factory overhead assigned to the Northern Cycles, only $13,500 is driven by the special order. $4,500 is a fixed cost. Certain costs can be omitted because the analysis is based upon margin contribution. Under the set structure, 25% of the factory overhead is fixed, which translates to the $4,500 of fixed costs associated with the special order. In this analysis, G&A costs do not even need to be calculated. The 10% markup offered by Mr. Bass does not even cover the special order’s portion of operating fixed costs ($ 4000 - $ 4,500 = ($ 500), much less the order’s share of fixed G&A or variable unit fixed cost allocation. In other words, once we reach the point of determining a loss, there is no need to proceed on to the costs that might be relevant if this special order was not so unreasonable. If the offer is accepted, the opportunity costs are considered as the difference in payments between what would be received from the Bass deal and what would be received on the open market. In this case, the Bass deal returns $ 4,000 above costs, and the open market sales return $ 24,000 above costs. Thus, the opportunity cost of the Bass deal is $ 20,000. It should consider whether it could place a special order of this size with other sources who are willing to pay a higher markup than Bass. It should consider whether the cost of keeping the Bass account is worth the short-term profit loss to the company. If the market is strong, Thousand Island may not be able to afford a customer like Bass. The Entertainment Corporation produces and sells three products. The three products, CDs, DVDs, and videotapes, are sold in a local market and in a regional market. At the end of the first quarter of 2009, the following income statement was prepared: Management has expressed special concern with the regional market because of the