110. A company has just received a special, one-time order for 1,000 units. Producing the order will have no effect on the production and sales of other units. The buyer's name will be stamped on each unit, at a total cost of $2,000. Normal cost data, excluding stamping, follows:
Direct materials
|
$ 10 per unit
|
Direct labor
|
16 per unit
|
Variable overhead
|
4 per unit
|
Allocated fixed overhead
|
12 per unit
|
Allocated fixed selling expense
|
8 per unit
|
What selling price per unit will this company require to earn $3,000 on the order?
111. Jorgensen Department Store has three departments: Clothing, Toys, and Hardware. The most recent income statement, showing the total operating profit and departmental results is shown below:
|
Total
|
|
Clothing
|
|
Toys
|
|
Hardware
|
|
Sales
|
$2,100,000
|
|
$1,000,000
|
|
$600,000
|
|
$500,000
|
|
Cost of goods sold
|
(1,260,000
|
)
|
(500,000
|
)
|
(400,000
|
)
|
(360,000
|
)
|
Gross profit
|
840,000
|
|
500,000
|
|
200,000
|
|
140,000
|
|
Direct expenses
|
(420,000
|
)
|
(200,000
|
)
|
(100,000
|
)
|
(120,000
|
)
|
Allocated expenses
|
(350,000
|
)
|
(100,000
|
)
|
(75,000
|
)
|
(175,000
|
)
|
Net income (loss)
|
$ 70,000
|
|
$ 200,000
|
|
$ 25,000
|
|
$(155,000
|
)
|
|
|
|
|
|
|
|
|
|
Based on this income statement, management is planning on eliminating the hardware department, as it is generating a net loss. If the hardware department is eliminated, the toy department will expand to fill the space, but sales will not change in total, nor will direct expenses. None of the allocated expenses will be avoided, but they will be reallocated. Clothing will be allocated $200,000 of these expenses, and Toys will be allocated $150,000 of these expenses.
Prepare a new income statement for Jorgensen Department Store, showing the results if the Hardware Department is eliminated. Should the Hardware Department be eliminated?