ACC 349 Week 4: What Is the Difference in Profit under Each of the Alternatives If the Clocks Are To Be Sold?
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Axia College of University of Phoenix (UoP) Management Accounting: Tools for Business Decision Making Weygandt, Kieso, Kimmel Intermediate Accounting Managerial Analysis BYP 6-2 (BYP6-2) Technology Plus manufactures private-label small electronic products, such as alarm clocks, calculators, kitchen timers, stopwatches, and automatic pencil sharpeners. Some of the products are sold as sets, and others are sold individually. Products are studied as to their sales potential, and then cost estimates are made. The Engineering Department develops production plans, and then production begins. The company has generally had very successful product introductions. Only two products introduced by the company have been discontinued.
(a) What is the difference in profit under each of the alternatives if the clocks are to be sold for $14.50 each to Kmart?
(b) What are the most important nonfinancial factors that Technology Plus should consider when making this decision?
(c) What do you think Technology Plus should do in regard to the Kmart order? What should it do in regard to continuing to manufacture the multi-alarm alarm clocks?