(12 marks) SKS makes both X-wing and Y-wing starfighters. X-Wing starfighters are more expensive and have significantly higher labour costs. You have the following planned production information for 2013 on each:

Sky Fighters X-Wing Y-Wing

Sales price 180 120

Labour 72 29

Material 41 36

Planned production 100,000 50,000

Total indirect production costs are expected to be $1,500,000 this year. They are most closely related to labour costs.

Fixed costs for 2021 are expected to be 5,000,000 and are allocated evenly to each product line.

a) (8 marks) Create a contribution margin income statement for 2021

b) (4 marks) The New Republic is concerned about increases in the cost of unobtainium which is needed to make starcraft. They want SKS to make a small number (1,000) of experimental starfighters based on the Y-wing but using only $20 of material. All other costs will be the same as the Y-Wing. The New Republic is willing to pay $60 for each experimental starfighter, code named Zatz-wing.

Based on cost and profit, advise the president of SKS, GEORGE LUCUS, if he should accept the order? Show all