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Alton Incorporated is working at full production capacity producing 23,000 units of a unique product. Manufacturing costs per unit for the product are as
Alton Incorporated is working at full production capacity producing 23,000 units of a unique product. Manufacturing costs per unit for the product are as follows: Direct materials Direct labor Manufacturing overhead Total manufacturing cost per unit $24 The per-unit manufacturing overhead cost is based on a $5 variable cost per unit and $92,000 fixed costs. The nonmanufacturing costs, all variable, are $10 per unit, and the sales price is $44 per unit. Sports Headquarters Company (SHC) has asked Alton to produce 5,600 units of a modification of the new product. This modification would require the same manufacturing processes. However, because of the nature of the proposed sale, the estimated nonmanufacturing costs per unit are only $5 (not $10). Alton would sell the modified product to SHC for $34 per unit Required 1-a. Calculate the contribution margin for 5,600 units for both the current and special order 1-b. Should Alton produce the special order for SHC? 2. Suppose that Alton Incorporated had been working at less than full capacity to produce 18.700 units of the product when SHC made the offer. What is the minimum price per unit that Alton should accept for the modified product under these conditions? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1A Req 18 Req 2 Suppose that Alton Inc. had been working at less than full capacity to produce 18,700 units of the product when SHC made the offer. What is the minimum price per unit that Alton should accept for the modified product under these conditions? (Round your answer to 2 decimal places.) Minimum price S 33.25 Required Information [The following information applies to the questions displayed below] The Jurassic Classics has four employees on its sales team and uses a compensation that provides each person with a base salary of $40,000 per year and the opportunity to earn commission on sales. The current commission is 5% of gross sales, and sales for the most recent period were $2,500,0000. Management is considering making a change to the compensation system and wants to evaluate two possible alternatives: going to a strictly commission-based compensation system and going to purely salary-based compensation. The strictly commission-based method would eliminate the salary but raise the commission to 11% of sales. If the purely salary-based approach is adopted, the salary for each person would rise to $70,000 and the commission would be eliminated. 3. What are some important factors that should be considered before making the decision?
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