After Class Practice 8-1 (2HW) units per month e following are the Class Company's unit costs of manufacturing and marketing a luxury pen at a level of 20,000 Direct materials $1.00 Direct labor 1.20 Variable overhead .80 Fixed overhead 50 Variable selling and administrative 1.50 Fixed selling and administrative .90 Consider each of the following questions independently. Unless otherwise stated, assume a selling price of $10 per pen. The first three questions review concepts covered in previous chapters.ck figure: c. 5091 units e. Decrease in income if buy(15,000) a What unit cost would be presented on the balance sheet for inventory (review from Ch. 4)? b. Assume that Class Company's volume increased to 25,000 units per month. What unit cost would be presented on the balance sheet for inventory (review from Chs 2-3)? C. What number of pens would Class Company have to sell each month to breakeven (Ch 3)? d. The company wants to enter a foreign market in which price competition is keen. The company seeks a one- time-only special order for 1,000 units. The company estimates shipping costs for these units to be $.75 per unit, but the fixed costs of obtaining the contract will be $2,000. No other variable selling and administrative costs will be incurred. What minimum sales price must be charged to cover the relevant costs? e A proposal is received from an outside supplier who will make and ship the pens for $5 per pen. With the newly freed capacity, Class plans on making mechanical pencils that would contribute $1 per pencil. Class can produce 30,000 of the new pencils per month. None of the fixed costs nor variable selling costs (Class has to sell the pens whether the pens are manufactured or purchased) from the luxury pen could be avoided, but production of the new pencils will require an additional $5,000 in fixed costs per month. Should Class purchase the new pens? lasts for the year: The income statement for the most recent year follows: Class operates two divisions: Corporate and Individual. The Individual division recently reported a net operating Sales Variable expenses Contribution margin Direct fixed expenses Allocated fixed expenses Operating income Individual $125,000 50,000 75,000 30,000 50,000 $(5,000) Corporate $500,000 300,000 200,000 110,000 50,000 $40,000 Prepare an income statement showing segment margin for each division; Add a column for the whole company. By how much would total income change if the Individual division were dropped