Discovery Company manufactures and sells a single product called Adventure. Operating at

capacity, the company can produce and sell $40,000$ adventures per year. Costs associated with

this level of production and sales are given below:

The adventures normally sell for $$50$ per unit. Fixed manufacturing and fixed selling expenses

are constant per year within the range of $30,000$ to $40,000$ units.

Each situation should be considered independently

Required:

Due to the current economic conditions Discovery is only able to sell $35,000$ units. It has

been offered by a resort to purchase $5,000$ units at $$40$ per unit. A $$10,000$ machine will

have to be purchased to print the resort name on each unit. Labelling will increase

material cost by $$0\mathrm{.}50$ per unit. Variable selling will decrease to $$2\mathrm{.}15$ per unit. Should

the offer be accepted?

Refer to $1$ assume Discovery expects to sell $36,000$ units to current customers. Should the

offer be accepted? The order must be filled in total.

Discovery has been approached from an outside supplier to make the $40,000$ units of

adventure for Discovery for $$34$ per unit. If the offer is accepted fixed manufacturing

overhead will decrease by $60\%.$ Should the offer be accepted? How much will profit

increase or decease from accepting the offer?Case #$3$ Discovery Company manufactures and sells a single product called Adventure. Operating at capacity, the company can produce and sell $40,000$ adventures per year. Costs associated with this level of production and sales are given below: $\backslash$table$[[,$Unit,Total$],[$Direct materials, $$20,$ $$800,000$