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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
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 Lahor Variable overhead Bixed overhead (52,905.600 per years 454,00 nits per year) Total $18.40 12.40 5.40 542.60 Riverside Discount Man, a chain of low-price stores, has asked Fairmount to supply it with 23,000 backpacks for a special promotion Riverside is planning, Riverside has offered to pay Fairmount a unit price of $46 per pack. The regular selling price is $64. The special order would require some modification to the basic model. These modifications would add $440 per unit in material cost, $190 per unitin tabor cost and $0.90 in variable overhead cost. Although Fairmount has the capacity to produce the 23,000 units without offecting its regular production of 454,000 units, a one-time rental of special testing equipment to meet Riverside's requirements would be needed. The equipment rental would be $85,800 and would allow Fairmount to test up to 54,000 units Required: o. Prepare a schedule to show the impact of filling the Riverside order on Fairmont's profits for the year, 6. 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 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 dedmal place. (.e., 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.) (A Costs in Thousands of Dollars) Status OUD Alternative 454,000 Unit 4T1 DOO Units Sales revenue Les variable costs Materials Labor Variable overhead Total variable cost S 0.05 00 Contribution margin Less Fixed costs Operating profit (los)
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