3. Assuming that Barlow's estimated customer demand is S00 units per product line, what is the maximum contribution margin the company can earn when using the 6,000 pounds of raw material on hand? . A foreign supplier could furnish Barlow with additional stocks of the raw material at a substantial premium over the usual price. Assuming Barlow's estimated customer demand is 500 units per product line and that the company has used its 6,000 pounds of raw material in an optimal fashion, what is the highest price Barlow Company should be willing to pay for an additional pound of materials? Explain. EXERCISE 11-9 Special Order Decision LO11-40 Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 60,000 units per year is: Direct materials Direct labor Variable Fioxed manufacturing overhead Variable selling and administrative expense $1.50 $510 $3.80 $4.20 The normal selling price is S21 per unit. The company's capacity is 75.000 units per year. An order has been received from a mail-order house for 15,000 units at a special price of $14.00 per unit. This grder would not affect regular sales or the company's total fixed costs. Required: I. What is the financial advantage (disadvantage) of accepting the special order? 2. As a separate matter from the special order, assume the company's inventory includes 1,000 units of this product that were produced last year and that are inferior to the current model. The units must be sold through regular channels at reduced prices. What unit cost is relevant for establishing a minimum selling price for these units? Explain EXERCISE 11-10 Make or Buy Decision LO11-3 Futura Company purchases the 40,000 starters that it installs in its standard line of farm tractors from a supplier for the price of $8.40 per unit. Due to a reduction in output, the company now has idle capacity that could be used to produce the starters rather than buying them from an outside supplier. However, the company's chief engineer is opposed to making the starters because the production cost per unit is S9.20 as shown below