3. please focus on B and c1with the red x.
King City Specialty Bikes (KCSB) produces high-end bicycles. The costs to manufacture and market the bicycles at the company's volume of 2,000 units per month are shown in the following table. ts $260 126 $386 Unit manufacturing costs Variable costs Fixed overhead Total unit manufacturing costs Unit nonmanufacturing costs Variable Fixed Total unit nonmanufacturing costs Total unit costs 50 146 196 $ 582 The company has the capacity to produce 2,000 units per month and always operates at full capacity. The bicycles sell for $620 per unit. Required: a. KCSB receives a proposal from an outside contractor who will assemble 800 of the 2,000 bicycles per month and ship them directly to KCSB's customers as orders are received from KCSB's sales force. KCSB would provide the materials for each bicycle, but the outside contractor would assemble, box, and ship the bicycles. The variable manufacturing costs would be reduced by 40 percent for the 800 bicycles assembled by the outside contractor. KCSB's fixed nonmanufacturing costs would be unaffected, but its variable nonmanufacturing costs would be cut by 60 percent for these 800 units produced by the outside contractor. KCSB's plant would operate at 60 percent of its normal level, and total fixed manufacturing costs would be cut by 20 percent. a-1. What in-house unit cost should be compared with the quotation received from the outside contractor? Assume the payment to the outside contractor is $150. a-2. Should the proposal be accepted for a price (that is, payment to the contractor) of $150 per unit? C-2. Do you agree with the EE's director? X Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req A Req B Req C1 Req c2 Compute the differential cost (including setup costs) and the contribution to profit for each of the three levels of activity. Note that fixed costs are not differential costs. One Seminar Four Seminars Eight Seminars Differential costs: Setup costs $ 900 900 900 Materials cost 9,600 2,400 1,100 16,800 7,800 Differential labor costs 2,700 Allocated fixed costs Total differential costs $ 4,400 $ 13,200 $ 25,500 Differential bid 6,336 $ 2,836 X $ 18,432 6,132 X $ 38,088 13,488 Contribution to profit Complete this question by entering your answers in the tabs below. Req A Reg B Req C1 Req C2 Assume the prospective client gives three options. It is willing to accept either of EE's bids for the one-seminar or four- seminar activity levels, but the prospective client will pay only 90 percent of the bid price for the eight-seminar package. EE's director responds, "We can't make money in this business by shaving our bids! Let's take the four-seminar option because we make the most profit on it. C1. What would be the contribution to profit for each of the three options? (Round your answers to nearest whole dollar.) Show less One Seminar Four Seminars Eight Seminars $ 34,279 Bid $ 6,336 $ 18,432 Incremental costs: Setup costs 900 900 900 Material cost Differential labor costs 2,400 9,600 16,800 1,100 2,700 7,800 4,400 $ 13,200 $ 25,500 2,836 X $ 6,132 X $ 9,679 X Total incremental costs $ Contribution to profit $
