Fairmount Travel Gear produces backpacks and sells them to vendors who sell them under their own label. The cost of one of its backpacks follows Materials Labor Variable overhead Fixed overhead (53,487,500 per year; 455, one units per year) Total $19.50 13.50 6.50 7.50 $47.00 Riverside Discount Mart, a chain of low-price stores, has asked Falmount to supply it with 34,000 backpacks for a special promotion Riverside is planning. Riverside has offered to pay Fairmount a unit price of $52 per pack. The regular selling price is $75. The special order would require some modification to the basic model. These modifications would add $5.50 per unit in material cost, $3.00 per unit In labor cost and $2.00 in variable overhead cost. Although Fairmount has the capacity to produce the 34,000 units without affecting its regular production of 465,000 units, a one-time rental of special testing equipment to meet Riverside's requirements would be needed. The equipment rental would be $78,000 and would allow Fairmount to test up to 65,000 units. Required: a. Prepare a schedule to show the impact of filling the Riverside order on Fairmont's profits for the year b. Do you agree with the decision to accept the special order? c. Considering only profit, determine the minimum quantity of backpacks in the special order that would make it profitable Complete this question by entering your answers in the tabs below. Required A Required B Required C Prepare a schedule to show the impact of filling the Riverside order on Fairmont's profits for the year. (Enter your answers in thousands rounded to 1 decimal place. (l... 5.400.400 should be entered as 5.400.4). Select option higher" or "lower". keeping Status Quo as the base. Select "none" if there is no effect.) (All Costs in Thousands of Dollars) Status Quo Alternative 465,000 Units 499.000 Units Difference higher Sales revenue Less variable costs Materials Labor Variable overhead Total variable cost Contribution margin Less: Foved costs Operating protos) $ 0.05 0.0 higher higher highes higher higher Thigher power Required B > Materials Labor Variable overhead Fixed overhead (53,487,500 per year; 465,000 units per year) Total $19.50 13.50 6.50 7.50 $47.00 Riverside Discount Mart, a chain of low-price stores, has asked Fairmount to supply it with 34,000 backpacks for a special prom Riverside is planning. Riverside has offered to pay Falrmount a unit price of $52 per pack. The regular selling price is $75. The order would require some modification to the basic model. These modifications would add $5.50 per unit in material cost $3.C unit In labor cost, and $2.00 in variable overhead cost. Although Fairmount has the capacity to produce the 34,000 units witho affecting its regular production of 465,000 units, a one-time rental of special testing equipment to meet Riverside's requiremen would be needed. The equipment rental would be $78,000 and would allow Fairmount to test up to 65,000 units. Required: a. Prepare a schedule to show the impact of filling the Riverside order on Fairmont's profits for the year. b. Do you agree with the decision to accept the special order? c. Considering only profit determine the minimum quantity of backpacks in the special order that would make it profitable. Complete this question by entering your answers in the tabs below. Required A Required B Required Considering only profit determine the minimum quantity of backpacks in the special order that would make it profitable. (Round your final answer to the nearest whole unit.) The minimum quantity of backpacks units
