Should surly company reject the special order from the new


1) Compare and contrast the advantages of the contribution approach versus absorption-costing approaches in cost-plus pricing.
2)Surly Company makes small boats. The company produces and sells 5,500 boats per year at a selling price of $160 per boat. Surly Company has excess capacity and is trying to get special orders. A new retailer wants to purchase 1,000 boats for $125 per boat. Surly Company is going to decline the special order because it costs $130 to make a single boat as seen below:

Direct materials                                                $50 per unit

Direct manufacturing labor                                    $55 per unit

Variable manufacturing overhead                       $10 per unit

Fixed manufacturing overhead                             $15 per unit

Total                                                              $130 per unit

Required:
A) Should Surly Company reject the special order from the new retailer? Why?
B) How much will Surly's net income increase with the special offer?

3)Sealy Company has a joint process, which produces three products called A, B and C. Each product may be sold at split-off or processed further and then sold. Joint processing costs for a year are $20,000. Other relevant data are:

                                            Sales Value                     Separable Processing                     Sales Value

Product                            at Split-Off                         Costs After Split-Off                     at Completion

A                                           $94,000                                       $28,000                                       $115,000

B                                              60,000                                          10,000                                           82,000

C                                              66,000                                          14,000                                           79,000

Required:
A) Which products should be processed further? Why?
B) If the Sealy Company maximizes profits, what is the operating income?

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Managerial Accounting: Should surly company reject the special order from the new
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