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Case #3 Bliss Manufacturing produces two types of control devices: Rivet and Viewer. Information for cach product line is as follows: Costs per unit Rivet

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Case #3 Bliss Manufacturing produces two types of control devices: Rivet and Viewer. Information for cach product line is as follows: Costs per unit Rivet Viewer Direct materials $90.00 $115.00 Direct labour $125.00 $150.00 Variable overhead $150.00 $180.00 Fixed overhead $120.00 $150.00 Selling price $600.00 $750.00 Units sold 3,000 1,800 On average, the labour wage rate is $25 per hour. Currently, available capacity is 27,300 direct labour hours, however the company only uses 25,800 direct labour hours to produce all control devices. If desired, the company could hire additional workers which would increase capacity up to 27,300 direct labour hours. Recently, a new customer has approached Bliss Manufacturing with an offer to buy 250 units of the Viewer at a price of $600 per unit. Required (A) How many direct labour hors are required for Bliss Manufacturing to produce the 250 units of the Viewer requested by the new customer? Does the company have sufficient capacity to produce the 250 Viewer units? (B) How much will the company's income increase or decrease by accepting the order? (C)Suppose the customer was interested in buying 400 units of the Viewer at a price of 5600 per unit. How much would income increase or decrease by accepting the order? Assume that the company cannot increase production beyond the 27,300 direct labour hours. (D)Suppose the customer was interested in buying 400 units of the Viewer at a price of Required (A) How many direct labour hours are required for Bliss Manufacturing to produce the 250 units of the Viewer requested by the new customer? Does the company have sufficient capacity to produce the 250 Viewer units? (B) How much will the company's income increase or decrease by accepting the order? (C)Suppose the customer was interested in buying 400 units of the Viewer at a price of $600 per unit. How much would income increase or decrease by accepting the order? Assume that the company cannot increase production beyond the 27,300 direct labour hours. (D)Suppose the customer was interested in buying 400 units of the Viewer at a price of $600 per unit and the company can increase production by paying the workers to work overtime. Direct labour costs would increase to $37.50 per hour of overtime worked. Variable overhead costs would increase by 50% for the overtime hours. How much would income increase or decrease by accepting the order under these conditions? (E) What non-financial factors should management at Bliss Manufacturing consider before accepting a special offer, such as the one proposed by the new customer

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