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Bridgeport Inc. manufactures two electronic products, widgets and gadgets, and has a capacity of 3,500 machine hours. Prices and costs for each product are as
Bridgeport Inc. manufactures two electronic products, widgets and gadgets, and has a capacity of 3,500 machine hours. Prices and costs for each product are as follows: Widget Gadget Selling price per unit $270 $355 Variable costs per unit Direct materials 36 60 Other direct costs 16 37 Variable Manufacturing overhead costs* 55 69 * Variable manufacturing overhead costs are applied at a rate of $65 per machine hour. Richetti Industries, a potential client, has offered $275 per unit to Bridgeport for 275 special units. These 275 units would incur the following production costs and time: Direct materials $10,425 Other direct costs $5,500 Machine hours 250 Assume that Bridgeport has enough excess capacity to produce the special order. Calculate what the total contribution would be if the special order from Richetti were accepted. Total contribution margin $ Assume that Bridgeport is currently operating at full capacity. Calculate the contribution margin per unit and per machine hour. (Round machine hours to 2 decimal places, e.g. 12.25 and final answers to 0 decimal places, e.g. 125.) Widget Gadget New Order CM per unit $ $ $ CM per machine hour $ $ $ Determine whether Bridgeport should produce the units for the special order instead of widget or gadget units. Bridgeport produce the units for the special order instead of widget or gadget units. Assume that Bridgeport is actually operating at 95% of full capacity. Calculate what the opportunity cost would be if Richetti's special order were accepted. Opportunity cost $ Assume that Bridgeport is actually operating at 95% of full capacity, and additional machines can be rented at a cost of $37,500 to produce Richetti's special order. If the special order is accepted, calculate its effect on Bridgeport's profit. Net profit from doing the special order $
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