Data for all questions: TrailPacker produces rugged backpacks for outdoor sports (hiking, rock climbing, etc.) Their backpacks are sold at many specialty outdoor stores across the country. The cost of manufacturing and marketing their backpacks, at their normal factory volume of 15,000 backpacks per month, is shown in the table below. TrailPacker sells these backpacks for $50 each. TrailPacker is making a small profit, but they would prefer to increase their Operating Income.

Hint: Fixed costs are shown on a per-unit basis in the table based on normal volume. However, fixed costs as a total do not change when volume changes, so you will need to determine total fixed costs first.

Data for all Questions:

Part 2: (20 points)

An online superstore has offered to purchase 10,000 backpacks (one time in one month) if the sales price was lowered to $40 per backpack for that one-time sale. (This specific sale is all or nothing they will not purchase less than 10,000 backpacks). TrailPackers maximum capacity is 20,000 units, and this special sale would not impact the sales price of TrailPackers normal sales to their usual customer base.

A) List TrailPackers options based on this Special Sale offer, their maximum capacity, and their usual production. (For example, one option is that TrailPacker can not accept the special sale and continue with their usual monthly sale to the outdoor retailers.) There should be at least 3 options including the example provided.

B) Prepare a monthly contribution margin income statement for each of the options in A. Label each option.

C) Do you think TrailPacker should accept this sale? Why? Support your decision with evidence and analysis.