MSl has been approached by a fourth-grade teacher from Portland about the possib

Question

MSl has been approached by a fourth-grade teacher from Portland about the possibility of creating a specially designed game that would be customized for her classroom and environment. The teacher would like an educational game to correspond to her classroom coverage of the history of the Pacific Northwest, and the state of Oregon in particularMSI has not sold its products directly to teachers or school systems in the past, but its Marketing Department identified that possibility during a recent meeting. The teacher has offered to buy 2,100 copies of the CD at a price of $6.00 each, MSI could easily modifty one of its existing educational programs about U.S. history to accommodate the request. The modifications would cost approximately $380. A summary of the information related to production of MSI's current history program follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total cost per unit Sales price per unit $ 1.10 0.4 2.07 190 $ 5.48 $13.00 Required: 1. Compute the incremental profit (or loss) from accepting the special order. Profit (or Loss) by 2. Should MSI accept the special order? 0 Yes o No 3. Suppose that the special order had been to purchase 2,100 copies of the program for $550 each. Compute the incremental profit (or loss) from accepting the special order under this scenario. Profit (or Loss)

Explanation / Answer

1 Per unit Total 2100 copies Revenue 6 12600 Expenses: Direct materials 1.1 2310 Directlabor 0.41 861 VAriable manufacturing overhead 2.07 4347 Modification cost 380 Total cost 7898 Incremental income 4702 Profit would increase by $4702 2 Yes, the order should be accepted 3 Per unit Total 2100 copies Revenue 5.5 11550 Expenses: Direct materials 1.1 2310 Directlabor 0.41 861 VAriable manufacturing overhead 2.07 4347 Modification cost 380 Total cost 7898 Incremental income 3652 Profit would increase by $3652

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.