4.) Following a strategy of product differentiation, Despotovich Corporation makes a high-end Computer Monitor, CM12. Despotovich Corporation presents the following data for the years 1 and 2: Year 1 Year 2 Units of CM12 produced and sold 5,000 5,500 Selling price $400 $440 Direct materials (pounds) 15,000 15,375 Direct materials costs per kilogram $40 $44 Manufacturing capacity for CM12 (units) 10,000 10,000 Total manufacturing conversion costs $500,000 $550,000 Manufacturing conversion costs per unit of capacity $50 $55 Selling and customer-service capacity (customers) 60 58 Total selling and customer-service costs $180,000 $181,250 Cost per customer of selling & customer-service capacity $3,000 $3,125 Despotovich Corporation produces no defective units but it wants to reduce direct materials usage per unit of CM 12 in Year 2. Manufacturing conversion costs in each year depend on production capacity dened in terms of CM12 units that can be produced. Selling and customer-service costs depend on the number of customers that the customer and service functions are designed to support. Neither conversion costs nor customer-service costs are affected by changes in actual volume. Despotovich Corporation has 46 customers in Year 1 and 50 customers in Year 2 . The industry market size for high-end computer monitors increased 5% from Year 1 to Year 2. Of the $40 increase in unit selling price, $10 was attributable to a general increase in prices. Required: a. What is the operating income for Year 1? b. What is the operating income in Year 2? c. What is the change in operating income from Year 1 to Year 2? d. What amount is the revenue effect of growth component? 3) Janice Long is considering building a budget hotel that offers clean small rooms with bathrooms. She anticipates that her 120 rooms will rent for 39,600 room-nights per year. The market price for equivalent rooms is $60 per night. Janice estimates that the capital cost will be $6,500,000 and she would like an annual return of 10%. Following are the estimated annual operating costs: Variable operating costs $ 21 per room night Fixed costs: Salaries and wages $ 420,000 Building maintenance 89,000 General administration 280,000 Total xed costs $J_El9,000 Required: a. What is the full cost per room-night? b. Can Janice meet the targeted return on investment based on the estimated costs and revenue? Show your calculations. 0. A tour operator has offered $30 per night for 20 rooms during a time of the year that there is likely to be at least that many rooms vacant. Should Janice accept this offer? Show your calculations. 1) Clearwater Company operates a wine outlet in a tourist area. One litre bottles sell for $12. Daily xed costs are $3,000, and variable costs are $6 per litre. An average of 750 litres are sold each day. Clearwater has a capacity of 800 litres per day. Required: a. Determine the average cost per bottle. b. A bus loaded with 40 senior citizens stops by at closing time and the tour director offers Clearwater $300 for 40 litres. Clearwater refuses, saying they would lose $2.50 on each litre. Is Clearwater correct about the $2.50? Why or why not? c. A fund-raising organization has offered Clearwater a one-year contract to buy 300 litres a day for $7.50 each. Should they accept the offer? Why or why not? 2) Parker and Spitzer Manufacturing is approached by a European customer to fulll a one-time-only special order for a product similar to one offered to domestic customers. The following per unit data apply for sales to regular customers: Direct materials $66 Direct labour 30 Variable manufacturing support 48 Fixed manufacturing support E Total manufacturing costs 248 Markup (50%) m Targeted selling price _$372 Parker and Spitzer Manufacturing has excess capacity. Required: a. What is the full cost of the product per unit? b. What is the contribution margin per unit? 0. Which costs are relevant for making the decision regarding this one-time-only special order? Why? (1. For Parker and Spitzer Manufacturing, what is the minimum acceptable price of this onetime-only special order? 6. For this one-time-only special order, should Parker and Spitzer Manufacturing consider a price of 200 per unit? Why or why not