$6-34$ Capacity and pricing decision Hudson Hydronics, Inc., is a corporation

based in Troy, New York, that sells high$-$quality hydronic control devices.

It manufactures two products, HCD$1$ and HCD$2,$ for which the following

information is available:

The average wage rate including fringe benefits is $$20$ per hour. The plant

has a capacity of $15,000$ direct labor hours, but current production uses only

$14,000$ direct labor hours of capacity.

Required

a$.$ A new customer has offered to buy $200$ units of HCD$2$ if Hudson lowers its price to $$400$ pers

unit. How many direct labor hours will be required to produce $200$ units of HCD$2?$

How much will Hudson Hydronic's profit increase or decrease if it accepts this proposal?

$($All other prices will remain as before.$)$

b$.$ Suppose the customer has offered instead to buy $300$ units of HCD$2$ at $$400$ per unit. How

much will the profits increase or decrease if Hudson accepts this proposal? Assume that the

company cannot increase its production capacity to meet the extra demand.

c$.$ Answer the question in $($b$),$ assuming that the plant can work overtime. Direct labor costs fos

the overtime production increase to $$30$ per hour. Variable support costs for overtime

production are $50\%$ more than for normal production.Hudson Hydronics, Inc is a corporation based in Troy, New York, that sells high$-$ quality hydronic devices. It manufactures two products, HCD$1$ and HCD$2,$ for which the following information is available.