Can you please help me on 5-26?

order must be taken in full or rejected totally. Should Medal Plus accept the special order? 3. As in requirement 1, assume that monthly capacity is 12,000 medals. Medal Plus is concerned that if it accepts the special order, its existing customers will immediately demand a price discount of $11 in the month in which the special order is being filled. They would argue that Medal Plus's capacity costs are now being spread over more units and that existing customers should get the benefit of these lower costs. Should Medal Plus accept the special order under these conditions? Show all calculations. LO 4 1. Current cost 5-26 ABC, product cost cro-subsidization. PEI Potatoes processes potatoes into potato cuts at its highly automated plant Farmany years, it processed potatoes for only the retail consumer market where it had a superb reputation for politycently, it started selling potato cuts to the institutional market, which includes hospitals, cafetera, and insity dormitories. Its penetration into the institutional market has been slower than predicted PEI's existing cosong systein has a single direct cost category (direct materials, which are the raw potatoes) and a single cost of production support Support costs are allocated on the basis of kilograms of potato cuts proced. Support costs include packaging material. The 2015 total actual costs for producing 1,000,000 kilograms of potato cuts (900,000 for the retail market and 100,000 for the institutional market) are: Direct materials used $ 250,000 Production support 1,298,000 The existing costing system does not distinguish between potato cuts produced for the retail or the institutional markets. At the end of 2015, PEI unsuccessfully bid for a large institutional contract. Its bid was reported to be 30% above the winning bid. This came as a shock, as PEl included only a minimum profit margin on its bid. Moreover, the PEl plant was widely acknowledged as the most efficient in the industry. As part of its lost contract bid review process, PEI decided to explore several ways of refining its cost- ing system. First, it identified that $260,000 of the $1,298,000 pertains to packaging materials that could be traced to individual jobs ($238,000 for retail and $22,000 for institutional). These will now be classified as a direct material. The $250,000 of direct materials used were classified as $225,000 for retail and $25,000 for institutional. Second, it used activity-based costing (ABC) to examine how the two products (retail potato cuts and institutional potato cuts) used the support area differently. The finding was that three activity areas could be distinguished and that different usage occurred in two of these three areas. The indirect cost per kilogram of finished product at each activity area is as follows: Activity Area Retail Potato Cuts Institutional Potato Cuts Cleaning $0.18 $0.18 Cutting 0.30 0.20 Packaging labour 0.60 0.28 There was no beginning or ending amount of any inventory (materials, work-in-process, or finished goods). Required 1. Using the current costing system, what is the cost per kilogram of potato cuts produced by PEI? 2. Using the refined costing system, what is the cost per kilogram of (a) retail market potato cuts, and (b) institutional market potato cuts? 3. Comment on the cost differences shown between the two costing systems in requirements 1 and 2 How might PEl use the information in requirement 2 to make better decisions? 1 ABC, wholesale, customer profitability. Ames Wholesalers sells furniture items to four department store chains. Sharon Ames commented, "We apply ABC to determine profit line profitability. The same ideas Pply to customer profitability, and we should find out our customer profitability as well." Ames Wholesalers LO4 Chain 1 or $3,200