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i Chrome File Edit View History Bookmarks People Window Help 5%D" Fri 7:44 PM a0E WMU-Central Authentication 0 (25) Gym Class Heroes: As 4- G Low Battery Your Mac will sleep soon unless plugged into a power outlet Close ezto.mheducation.com/hm.tpx MSI's educational products are currently sold without any supplemental materials. The company is considering the indlusion 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 Instructional Materials CD Only 33,000 unils Eslimated demand Estimated sales price Estimated cost per un 33,000 units S 44.00 S 28.00 S 5.75 7.00 7.00 S 6.25 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead 10.00 10.25 33 00 Unit manufacturing cost Additional development cost 26 25 $150,000 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 Sales Revenue Variable Costs Contribution Margin Additional Development Costs Differential Profit (Loss) 2. Should MSI add the instructional materials or sell the CDs without them? Sel the CDs without Instructional Materials Add the Instructional Materials 3-a. Suppose that the higher price of the CDs with instructional materials is expected to reduce demand to 18,000 units, Complete the table given below based on Requirement 1 and 2 data. CD Only Sales Revenue Vañable Casts Contributlon Margin Additional Development Costs Differential Profit (Loss)

Explanation / Answer

Req 1: CD ONLY CD WITH INCREMENTAL INST. MANUAL sales revenue 924000 1452000 528000 Variable cost 651750 874500 -222750 Contribution margin 272250 577500 305250 Additional development cost 0 150000 -150000 Differential profits 272250 427500 155250 Req 2: MSI should Add the Instruction manual Req 3: v CD ONLY CD WITH INCREMENTAL INST. MANUAL sales revenue 924000 792000 -132000 Variable cost 651750 477000 174750 Contribution margin 272250 315000 42750 Additional development cost 0 150000 -150000 Differential profits 272250 165000 -107250 MSI should not add Instruction manual

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