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Eversharp is a knife manufacturer. The company normally sells 5 , 0 0 0 sets of high quality knives each year and, with its current

Eversharp is a knife manufacturer. The company normally sells 5,000 sets of high quality knives each year and, with its current staff and machinery, has the capacity to produce up to 6,000 sets of knives. At this level of output, the company estimates its costs of producing and selling one set of knives as follows: Per unitDirect materials$5.00Direct labour1.50Variable manufacturing overhead1.00Fixed manufacturing overhead2.00Sales commissions1.50Fixed selling and administrative expenses4.00Total costs$15.00 The companys selling price is $20 per unit. An order has been received for 500 units, but because its a bulk purchase, the buyer has requested a 40% price discount. If the order were accepted it would not affect the companys regular sales. There would be no sales commissions on this deal, and fixed costs would not be affected. The purchasing company would like their logo engraved into the handle of each knife, which would increase labour costs by $0.25 per unit and require the purchase of a new machine for $2,000.1)What is Eversharp's total production Excess Capacity for the period after this Special Order?
2)Did Direct Materials (DM) change on a $/unit basis between Regular Sales and the Special Order?
3)What is the Total Dollar ($) cost for Direct Labor (DL) for Regular Sales?
4)what is the Total NIBT (Net Income Before Tax) for the Regular Sales? Hint: what are the total units at CAPACITY?
5) What is the Contribution Margin for the Special Order on a PER UNIT basis?

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