volue 0.61 points Required Information MSI\'s educational products are currently
ID: 2438620 • Letter: V
Question
volue 0.61 points Required Information MSI's educational products are currently sold without any supplemental materials. The company is considering the inclusion of instructional materials such as an overhead slide presentation, potential test questions, and classroom bulletin board materials for teachers. A summary of the expected costs and revenues for MSI's two options follows: CD with nstructional Matenals CD Only Estimaied dernand Fstimated sales price Estimated cost per unit 35,000 units $ 27 35,000 units $ 46 C $ 475 $ 725 Direct materials Direct labor Vanable manutacturing overnead Fixed manufacturing overhead 7.00 COC 7.50 26.25 11.00 10 2 7.50 36.00 Unit manufacturing cost Additonal development cost $105,00 Required: 1. Based on the given data, Compute the increase or decrease in profit that would result if instructional materials were added to the CDs. CD Only Materials Salcs Roevenuc Variable Ccsts Contribution Margin Additional Development Costs Dilferenlial Frofit (Loss)Explanation / Answer
Req 1: CD Only CD with Incremental Instruction Sales revenue 945000 1610000 665000 Variable cost 656250 997500 -341250 Contribution Margin 288750 612500 323750 Additional Development Cost 0 105000 -105000 Differential Profit/(Loss) 288750 507500 218750 MSI should Add Instruction Manual Req 3: CD Only CD with Incremental Instruction Sales revenue 945000 1012000 67000 Variable cost 656250 627000 29250 Contribution Margin 288750 385000 96250 Additional Development Cost 0 105000 -105000 Differential Profit/(Loss) 288750 280000 -8750 MSI should Sell the CD without Insttruction Manual.
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