In five pages this paper discusses a specially constructed machine for a company who no longer can accept the delivery in a consideration of various alternatives for the manufacturer. One source is cited in the bibliography.
Name of Research Paper File: CC6_KSacctSellMach.rtf
Unformatted Sample Text from the Research Paper:
Jay Company. Just as Miami completed the machine, Jay Co. declared bankruptcy, defaulted on the order, and forfeited the 10% deposit paid on the selling price of $72,500.
Miamis manufacturing manager identified the costs already incurred in the production of the special machinery for Jay Co. as follows: Direct Material $16,600 Direct Labor $21,400 Manufacturing Overhead Applied: Variable $10,700 Fixed $5350 $16,050
Fixed S&A costs $5405 Total $59,455 less 7,250 deposit = $52,205 net production cost. 1. Determine the dollar contribution each of the three
alternatives will add to Miamis before tax profit. Alternative 1: Kaytell Corp. Kaytell will buy the machinery as a special order for
$68,400 if Miami reworks it to Kaytells specifications. Kaytell will pay when it takes delivery in two months; Miami will need a month to rework the machine with additional
costs of $10,400. Because this is being classified as a special order, Miami also will need to pay a 3 percent commission on
the purchase price of $68,400. Kaytell intends to pay the balance immediately upon delivery, qualifying it for a 2 percent discount for paying within 10 days.
Alternative 2: Convert to standard model. If Miami converts the completed machine to a standard model, it can sell the reworked machine for $62,500.
Miamis costs of conversion total $6,150. There is no specific information given as to whether Miami can expect the purchaser of this conversion
will take the 2/10 option, but most of Miamis customers do take advantage of that discount. It will be assumed that the purchaser of the conversion model will take