1 Problem & Accept or Reject a special order Moare company manufactures and sells a single product a Lop. Operating at capacity. the company con produce and sell 30,000 Lops per year. Costs associated with this level of production and sales are given below: Unit Total Direct materials $450,000 Direct labour 240,000 Variable manufacturing overhead 90,000 270,000 Fixed manufacturing overhead 120,000 Variable selling expense Fixed selling 180,000 Total Cost $15 $8 3 9 4 6 expense $45 $1,350,000 The Lops normally sell for $50 each. Fixed manufac. - turing overhead is constant at $270,000 per year within the gange of 25,000 though 30,000 Lops per year Required: 1. Assume that due to recession . Moare company, espects to sell only 25,000 Lops though regolar channels next year. A large retail chain has Comm -- selling moore company name on no offered to purchase 5,000 Lope. If moone is willing to accept a 16% discount off the regular price. There would be no sales issions on this onder, 80 Vauable expense would be slashed by 75%, However, would have to purchase a Special machine to engrave the retail chain's the 5,000 units. This machine would cost $10,000. Moore company has Assurance that the retail chain will purchase additional units in the future. De termine the impact on profits next year if this special orider is accepted 2. Refer to the original data. Assume again that Moore company expects to sell only 25,000 Lops through regular channels next year. The provincial government would like to make a one time only purchase f. 5,000 Lops. The government would pay a fixed fee of $1,80 per Lop and it would reimburse mooga company for all costs of production (variab and fixed) associated with the units, since the would pick up the Lops with its own trucks, there would be no variable selling expense associated with this arder. order, by how much will profit increase government of moare Company accepts the decrease for the year? the 3. Assume the same situation that described in (2) above, except that the company eapects to sell 30,000 Lops thorough regulay channels neat year. So accepting, governments orden would require giving up regular sales of 5,000 Lops of the government's arder is accepted. by how much will profits increase or decrease from what they would be if the through regular channels? 5,000 Lops UU were sold