E7-6 (Algo) Analyzing Special-Order Decision [LO 7-2, 7-3] MSI has been approached by a fourth-grade teacher from Portland about the possibility of creating a specially designed game that would be customized for her classroom and environment. The teacher would like an educational game to correspond to her classroom coverage of the history of the Pacific Northwest, and the state of Oregon in particular. MSI has not sold its products directly to teachers or school systems in the past, but its Marketing Department identified that possibility during a recent meeting. The teacher has offered to buy 2,300 copies of the CD at a price of $5.00 each. MSI could easily modify one of its existing educational programs about U.S. history to accommodate the request. The modifications would cost approximately $480. A summary of the information related to production of MSI's current history program follows: Direct materials Direct labor Variable manufacturing overhead Pixed manufacturing overhead Total cost per unit Sales price per unit $ 1.14 0.43 2.06 1.90 $5.53 $13.00 Required: 1. Compute the incremental profit (or loss) from accepting the special order. 2. Should MSI accept the special order? 3. Suppose that the special order had been to purchase 2,300 copies of the program for $1.50 each. Compute the incremental profit (or loss) from accepting the special order under this scenario. 4. Suppose that MSI is operating at full capacity. To accept the special order, it would have to reduce production pf the history program. Compute the special order price at which MSI would be indifferent between accepting or rejecting the special order. Complete this question by entering your answers in the tabs below. The teacher has offered to buy 2,300 copies of the CD at a price of $5.00 each. MSI could easily modify one of its existing educationa programs about U.S. history to accommodate the request. The modifications would cost approximately $480. A summary of the information related to production of MSI's current history program follows: Direct materials Direct labor Variable manufacturing overhead Pixed manufacturing overhead Total cost per unit Sales price per unit $ 1.14 0.43 2.06 1.90 $ 5.53 $13.00 Required: 1. Compute the incremental profit (or loss) from accepting the special order. 2. Should MSI accept the special order? 3. Suppose that the special order had been to purchase 2,300 copies of the program for $1.50 each. Compute the incremental profit (or loss) from accepting the special order under this scenario. 4. Suppose that MSI is operating at full capacity. To accept the special order, it would have to reduce production of the history program. Compute the special order price at which MSI would be indifferent between accepting or rejecting the special order. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Compute the incremental profit (or loss) from accepting the special order. Profit (or Loss) by LLIUTIUI pice dl Wnien MSI would be indifferent between a Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Should MSI accept the special order? Should MSI accept the special order? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Suppose that the special order had been to purchase 2,300 copies of the program for $1 profit (or loss) from accepting the special order under this scenario. Profit (or Loss) LY J. Juppose ulale speciale du been to purchase 2,300 copies of the prograr (or loss) from accepting the special order under this scenario. 4. Suppose that MSI is operating at full capacity. To accept the special order, it would program. Compute the special order price at which MSI would be indifferent betwee Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Suppose that MSI is operating at full capacity. To accept the special order, it would hav program. Compute the special order price at which MSI would be indifferent between a (Round your answer to 2 decimal places.) Special Order Price
