klean fiber company is the creator of y-go, a technology that weaves silver into its fabrics to kill

Jun 21st, 2015
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klean 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 as an undergarment for sports activities. Operating at capacity, the company can produce 1,072,700 undergarments of y-go a year. The costs for an individual garment when the company operates at full capacity are as follows: Per undergarment total Direct materials $2.01 $2,156,127 Direct labor 0.45 482,715 Variable manufacturing overhead 1.10 1,179,970....................................................Use incremental analysis, determine whether klean fiber should accept the armys offer

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Computation of selling Price per unitParticularsDirect materialDirect LaborVariable manufacturing overheadOther costs and profitTotal selling price offered by the ArmyAmount $ per unit2.010.451.11.064.62Total CostParticularsDirect materialDirect LaborVariable manufacturing overheadTotal selling price offered by the ArmyAmount $ per unit2.010.451.13.56Incremental Analysis for Klean Fiber CompanyParticularsRevenue (249,600 * 4.62)Variable costsDirect material ( 249,600 * 2.01)Direct labor ( 249,600 * 0.45)Variable overhead ( 249,600 * 1.10)Total variable cost

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