Brief Exercise 7-3 Open calculator Your answer is partially correct. Try again. At Bargain Electronics, it costs $31 per unit ($20 variable and $11 fixed) to make an MP3 player that normally sells for $49. A foreign wholesaler offers to buy 4,170 units at $25 each. Bargain Electronics will incur special shipping costs of $1 per unit. Assuming that Bargain Electronics has excess operating capacity, indicate the net income (loss) Bargain Electronics would realize by accepting the special order. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Reject Order Accept Order Net Income Increase Decrease Revenues CostsVariable manufacturing Shipping X ******* Net income The special order should be i.. Brief Exercise 7-4 Manson Industries incurs unit costs of $8 ($5 variable and $3 fixed) in making an assembly part for its finished product. A supplier offers to make 11,500 of the assembly part at $6 per unit. If the offer is accepted, Manson will save all variable costs but no fixed costs. Prepare an analysis showing the total cost saving, if any, Manson will realize by buying the part. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45.) Make Net Income Increase (Decrease) Buy Variable manufacturing costs & Fixed manufacturing costs Purchase price Total annual cost The decision should be to the part. Brief Exercise 7-5 Pine Street Inc, makes unfinished bookcases that it sells for $58. Production costs are $38 variable and $10 fixed. Because it has unused capacity, Pine Street is considering finishing the bookcases and selling them for $74. Variable finishing costs are expected to be an additional $8 per unit with no increase in fixed costs. Prepare an analysis on a per unit basis showing whether Pine Street should sell unfinished or finished bookcases. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Process Further Net Income Increase (Decrease) Sell Sales price per unit Cost per unit Variable Fixed Total Net income per unit The bookcases Brief Exercise 7-7 Bryant Company has a factory machine with a book value of $85,100 and a remaining useful life of 5 years. It can be sold for $32,300. A new machine is available at a cost of $515,600. This machine will have a 5-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $629,200 to $501,000. Prepare an analysis showing whether the old machine should be retained or replaced. (In the first two columns, enter costs and expenses as positive amounts, and any amounts received as negative amounts. In the third column, enter net income increases as positive amounts and decreases as negative amounts. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Retain Equipment Replace Equipment Net Income Increase (Decrease) Variable manufacturing costs New machine cost Sell old machine Total The old factory machine should be Brief Exercise 7-8 Lisah, Inc., manufactures golf clubs in three models. For the year, the Big Bart line has a net loss of $5,000 from sales $201,000, variable costs $176,000, and fixed costs $30,000. If the Big Bart line is eliminated, $20,100 of fixed costs will remain. Prepare an analysis showing whether the Big Bart line should be eliminated. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Continue Eliminate Net Income Increase (Decrease) Sales $ Variable costs Contribution margin Fixed costs Net Income / (Loss) The Big Bart product line should be