Blossom Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on clothingwhile managing heat. Y-Go has become very popular in undergarments for sports activities. Operating at capacity, the company canproduce 1,000,000 Y-Go undergarments a year. The per unit and the total costs for an individual garment when the company operatesat full capacity are as follows.Direct materialsDirect laborVariable manufacturing overheadFixed manufacturing overheadVariable selling expensesTotalsPerUndergarment$1.900.400.951.400.30$4.95Total$1,900,000400,000950,0001,400,000300,000$4,950,000The U.S. Army has approached Blossom Fiber and expressed an interest in purchasing 249,000 Y-Go undergarments for soldiers inextremely warm climates. The Army would pay the unit cost for direct materials, direct labor, and variable manufacturing overheadcosts. In addition, the Army has agreed to pay an additional $0.95 per undergarment to cover all other costs and provide a profit.Presently, Blossom Fiber is operating at 70% capacity and does not have any other potential buyers for Y-Go. If Blossom Fiber acceptsthe Army's offer, it will not incur any variable selling expenses related to this order.Prepare an incremental analysis for the Blossom Fiber. (Enter negative amounts using either a negative sign preceding thenumber e.g. -45 or parentheses e.g. (45).) Blossom Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on clothingwhile managing heat. Y-Go has become very popular in undergarments for sports activities. Operating at capacity, the company canproduce 1,000,000 Y-Go undergarments a year. The per unit and the total costs for an individual garment when the company operatesat full capacity are as follows.Direct materialsDirect laborVariable manufacturing overheadFixed manufacturing overheadVariable selling expensesTotalsPerUndergarment$1.900.400.951.400.30$4.95Total$1,900,000400,000950,0001,400,000300,000$4,950,000The U.S. Army has approached Blossom Fiber and expressed an interest in purchasing 249,000 Y-Go undergarments for soldiers inextremely warm climates. The Army would pay the unit cost for direct materials, direct labor, and variable manufacturing overheadcosts. In addition, the Army has agreed to pay an additional $0.95 per undergarment to cover all other costs and provide a profit.Presently, Blossom Fiber is operating at 70% capacity and does not have any other potential buyers for Y-Go. If Blossom Fiber acceptsthe Army's offer, it will not incur any variable selling expenses related to this order.Prepare an incremental analysis for the Blossom Fiber. (Enter negative amounts using either a negative sign preceding thenumber e.g. -45 or parentheses e.g. (45).)

A method used in corporate decision-making to ascertain the actual cost difference between potential…

Blossom Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on clothing while managing heat. Y-Go has become very popular in undergarments for sports activities. Operating at capacity, the company can produce 1,000,000 Y-Go undergarments a year. The per unit and the total costs for an individual garment when the company operates at full capacity are as follows. Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Totals Per Undergarment $1.90 0.40 0.95 1.40 0.30 $4.95 Total $1,900,000 400,000 950,000 1,400,000 300,000 $4,950,000 The U.S. Army has approached Blossom Fiber and expressed an interest in purchasing 249,000 Y-Go undergarments for soldiers in extremely warm climates. The Army would pay the unit cost for direct materials, direct labor, and variable manufacturing overhead costs. In addition, the Army has agreed to pay an additional $0.95 per undergarment to cover all other costs and provide a profit. Presently, Blossom Fiber is operating at 70% capacity and does not have any other potential buyers for Y-Go. If Blossom Fiber accepts the Army's offer, it will not incur any variable selling expenses related to this order. Prepare an incremental analysis for the Blossom Fiber. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q