Question
CD Only CD with Instructional Materials Estimated demand 29,000 units 29,000 units Estimated sales price $ 25.00 $ 40.00 Estimated cost per unit Direct materials
CD Only CD with Instructional Materials Estimated demand 29,000 units 29,000 units Estimated sales price $ 25.00 $ 40.00 Estimated cost per unit Direct materials $ 3.75 $ 4.25 Direct labor 5.00 8.00 Variable manufacturing overhead 5.00 8.25 Fixed manufacturing overhead 4.50 4.50 Unit manufacturing cost $ 18.25 $ 25.00 Additional development cost $ 105,000 Required:
1. Based on the given data, Compute the increase or decrease in profit that would result if instructional materials were added to the CDs.
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2. Should MSI add the instructional materials or sell the CDs without them?
a. Add the Instructional Materials
b. Sell the CDs without Instructional Materials
3-a. Suppose that the higher price of the CDs with instructional materials is expected to reduce demand to 20,000 units. Complete the table given below based on Requirement 1 and 2 data.
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3-b. Should MSI add the instructional materials or sell the CDs without them?
a. Add the Instructional Materials
b. Sell the CDs without Instructional Materials
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