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1) Sunray Corporation has analyzed their customer and order handling data for the past year and has determined the following costs: Order processing cost per

1) Sunray Corporation has analyzed their customer and order handling data for the past year and has determined the following costs:

Order processing cost per order $7

Additional costs if order must be expedited (rushed) $9.00

Customer technical support calls (per call) $12

Relationship management costs (per customer per year) $1200

In addition to these costs, product costs amount to75% of Sales.

In the prior year, Sunray had the following experience with one of its customers, Rainwater Company:

Sales $16,000

Number of orders 160

Percent of orders marked rush 70%

Calls to technical support 80

-Calculate the profitability of the Chester Company account.

2) Delta Games, Inc. produces a game that sells for $175 per unit. The cost of producing 25,000 games in the prior year was:

Direct material $625,000

Direct labor 375,000

Variable overhead 125,000

Fixed overhead 1,500,000

Total cost $2,625,000

At the start of the current year, the company received an order for 3,000 games from a gaming company in England. Management of Delta Games has mixed feelings about the order. On the one hand they welcome the order because they currently have excess capacity. Also, this is the company's first international order. On the other hand, the company in England is willing to pay only $125 per unit.

-What will be the effect on profit of accepting the order?

-Round to two decimal places.

3) Starship Company has $45 per unit in variable costs and $1,200,000 per year in fixed costs. Demand is estimated to be 108,000 units annually.

-What is the price if a markup of 40% on total cost is used to determine the price?

-Round to two decimal places.

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