Davis Kitchen Supply produces stoves for commercial kitchers. The costs to manufacture and market the stoves st the company's normal volume of 6.000 units per month are shown in the following table. $44 59 19 $ 186 unit manufacturing costs Variable saterials Variable labor Variable overhead Fixed overhead Total unit manufacturing costs unit marketing costs Variable Fixed Total unit marketing costs Total unit costs . 19 64 $26 Unless otherwise stated, assume that no connection exsts between the situation described in each questioneschis Independent Unless otherwise stated, assume a regular selling price of $402 per unit lgnore Income taxes and other costs that are not mentioned In the table or in the question itself. Required: .. Market research estimates thet volume could be increased to 7,000 units, which is wel within production capacity limitations if the price were cut from $402 to $357 per unit Assuming that the cost behavior patterns implied by the data in the table are correct .-1. What would be the impact on monthly sales, costs, and income? 2-2 Would you recommend taking this action b. On March 1, the federal government offers Devis contract to supply 2000 units to military bases for s March 31 delivery. Becsuse of an unusually large number of rush orders from its regular customers, Davis plans to produce 8,000 units during March, which will use allovalable capacity. If it accepts the government order. It would lose 1000 units normally sold to regular customers to competitor. The golemment contract would reimburse's share of March manufacturing costs" plus pays $56.000 fixed fee profit. (No variable marketing costs would be incurred on the government's units. Assuming that the government's "Share of March manufacturing cost will be the proportionate fred manufacturing cost, what impact would accepting the government contract have on March Income c. Davishes an opportunity to enter a highly competitive foreign market. An attraction of the foreign market is that its demands greatest when the domestic market's demand is quite low; thus, Idle production facilities could be used without affecting domestic business. An order for 2000 units is being sought sta below-normal price to enter this market For this order shoping costs will total $34 per unit; total (marketing costs to obtain the contract will be $6.000. No other variable marketing costs would be required on this order, and it would not affect domestic business. What is the minimum unit price that Davis should consider for this order of 2,000 units? d. An Inventory of 460 units of an obsolete model of the stove remains in the stockroom. There must be sold through regular channels (thus incurring variable marketing costs) at reduced prices or the inventory will soon be valueless. What is the minimum scceptable seling price for these units! e-1 A proposals received from an outside contractor who will make and ship 2.000 stoves per month directly to Davis's customers as orders are received from Davis salesforce. Davis's fixed marketing costs would be unaffected, but variable marketing costs would be cut by 20 percent for these 2.000 units produced by the contractor Davis's plant would operste st two-thirds of its normal level, and total forced manufacturing costs would be cut by 40 percent. What In-house un cost should be used to compare with the quotation received from the supper Assume the payment to the outside contractor is $209 --2 Should the proposal be accepted for a price that is, payment to the outside contractor of $209 per unit? f-1. A proposals received from an outside contractor who will make and ship 2.000 stoves per month directly to Davis's customers as orders are received from Davis's salesforce. Davis's fixed marketing costs would be unaffected, but variable marketing costs would be cut by 20 percent for these 2.000 units produced by the contractor The Idle iscilities would be used to produce 1600 modified stoves per month for use in extreme climates. These modified stoves could be sold for $444 euch, while the costs of production would be $269 per unit variable manufacturing expense. Variable marketing costs would be $44 per united marketing and manufacturing costs would be unchanged whether the original 6.000 regular stoves were manufactured or the mix of 4,000 regular stoves plus 1.600 modified stoves were produced. Whst in-house unit cost should be used to compare with the quotation received from the outside contractor! Assume the payment to the outside contractor is $209. f-2 Should the proposal be accepted for a price of $209 per unit to the outside contractor? Complete this question by entering your answers in the tabs below. A1 PAZ Ro Pog RD RE1 RE2 RFI Rag F2 - Market research estimates that volume could be increased to 7,000 units, which is well within production capacity limitations the price were out from $402 to $357 per unit. Azuming that the most behavior patterns implied by the data in the table are correct A1. What would be the impact on monthly sales, costs, and income? (Select option "Increase' or 'decresce", keeping before price reduction as the base. Select 'none' if there is no effect.) Show less Before Price Reduction After Price Reduction Impact Salos pro Quantity Revenue Variable manufacturing costs Variable marketing costs Contribution margin Found manufacturing Fond marketing costs Income Davis Kitchen Supply produces stoves for commercial kitchers. The costs to manufacture and market the stoves st the company's normal volume of 6.000 units per month are shown in the following table. $44 59 19 $ 186 unit manufacturing costs Variable saterials Variable labor Variable overhead Fixed overhead Total unit manufacturing costs unit marketing costs Variable Fixed Total unit marketing costs Total unit costs . 19 64 $26 Unless otherwise stated, assume that no connection exsts between the situation described in each questioneschis Independent Unless otherwise stated, assume a regular selling price of $402 per unit lgnore Income taxes and other costs that are not mentioned In the table or in the question itself. Required: .. Market research estimates thet volume could be increased to 7,000 units, which is wel within production capacity limitations if the price were cut from $402 to $357 per unit Assuming that the cost behavior patterns implied by the data in the table are correct .-1. What would be the impact on monthly sales, costs, and income? 2-2 Would you recommend taking this action b. On March 1, the federal government offers Devis contract to supply 2000 units to military bases for s March 31 delivery. Becsuse of an unusually large number of rush orders from its regular customers, Davis plans to produce 8,000 units during March, which will use allovalable capacity. If it accepts the government order. It would lose 1000 units normally sold to regular customers to competitor. The golemment contract would reimburse's share of March manufacturing costs" plus pays $56.000 fixed fee profit. (No variable marketing costs would be incurred on the government's units. Assuming that the government's "Share of March manufacturing cost will be the proportionate fred manufacturing cost, what impact would accepting the government contract have on March Income c. Davishes an opportunity to enter a highly competitive foreign market. An attraction of the foreign market is that its demands greatest when the domestic market's demand is quite low; thus, Idle production facilities could be used without affecting domestic business. An order for 2000 units is being sought sta below-normal price to enter this market For this order shoping costs will total $34 per unit; total (marketing costs to obtain the contract will be $6.000. No other variable marketing costs would be required on this order, and it would not affect domestic business. What is the minimum unit price that Davis should consider for this order of 2,000 units? d. An Inventory of 460 units of an obsolete model of the stove remains in the stockroom. There must be sold through regular channels (thus incurring variable marketing costs) at reduced prices or the inventory will soon be valueless. What is the minimum scceptable seling price for these units! e-1 A proposals received from an outside contractor who will make and ship 2.000 stoves per month directly to Davis's customers as orders are received from Davis salesforce. Davis's fixed marketing costs would be unaffected, but variable marketing costs would be cut by 20 percent for these 2.000 units produced by the contractor Davis's plant would operste st two-thirds of its normal level, and total forced manufacturing costs would be cut by 40 percent. What In-house un cost should be used to compare with the quotation received from the supper Assume the payment to the outside contractor is $209 --2 Should the proposal be accepted for a price that is, payment to the outside contractor of $209 per unit? f-1. A proposals received from an outside contractor who will make and ship 2.000 stoves per month directly to Davis's customers as orders are received from Davis's salesforce. Davis's fixed marketing costs would be unaffected, but variable marketing costs would be cut by 20 percent for these 2.000 units produced by the contractor The Idle iscilities would be used to produce 1600 modified stoves per month for use in extreme climates. These modified stoves could be sold for $444 euch, while the costs of production would be $269 per unit variable manufacturing expense. Variable marketing costs would be $44 per united marketing and manufacturing costs would be unchanged whether the original 6.000 regular stoves were manufactured or the mix of 4,000 regular stoves plus 1.600 modified stoves were produced. Whst in-house unit cost should be used to compare with the quotation received from the outside contractor! Assume the payment to the outside contractor is $209. f-2 Should the proposal be accepted for a price of $209 per unit to the outside contractor? Complete this question by entering your answers in the tabs below. A1 PAZ Ro Pog RD RE1 RE2 RFI Rag F2 - Market research estimates that volume could be increased to 7,000 units, which is well within production capacity limitations the price were out from $402 to $357 per unit. Azuming that the most behavior patterns implied by the data in the table are correct A1. What would be the impact on monthly sales, costs, and income? (Select option "Increase' or 'decresce", keeping before price reduction as the base. Select 'none' if there is no effect.) Show less Before Price Reduction After Price Reduction Impact Salos pro Quantity Revenue Variable manufacturing costs Variable marketing costs Contribution margin Found manufacturing Fond marketing costs Income