Grant Industries, a manufacturer of electronic parts, has recently received an invitation to bid on a special order for 23,000 units of one of its most popular products. Grant currently manufactures 46,000 units of this product in its Loveland, Ohio, plant. The plant is operating at 50% capacity. There will be no marketing costs on the special order. The sales manager of Grant wants to set the bid at $10 because she is sure that Grant will get the business at that price. Others on the executive committee of the firm object, saying that Grant would lose money on the special order at that price. Units 46,000 69,000 Manufacturing costs: Direct materials 3 92,000 $ 138,000 Direct labor 138,000 207,000 Factory overhead 322,000 414,000 Total manufacturing costs 5 552,000 $ 759,000 Unit cost $ 12 $ 11 Required: 2. What is the relevant cost per unit? What do you think the minimum short-term bid price per unit should be? What would be the impact on shortterm operating income if the order is accepted at the price recommended by the sales manager? 4. What would the total opportunity cost be if by accepting the special order the company lost sales of 6,400 units to its regular customers? Assume the preceding facts plus a normal selling price of $22 per unit. Complete this question by entering your answers in the tabs below. i\" \"i 3 Required 2 Required 4 u What is the relevant cost per unit? What do you think the minimum short-term bid price per unit should be? What would be the impact on short-term operating income if the order is accepted at the price recommended by the sales manager? Relevant cost per unit Bid price per unit should be any price above Change in short-term operating income Complete this question by entering your answers in the tabs below. Required 2 Required 4 What would the total opportunity cost be if by accepting the special order the company lost sales of 6,400 units to its regular customers? Assume the preceding facts plus a normal selling price of $22 per unit. Toial opportunity cost I Sharman Athletic Gear Incorporated (SAG) is considering a special order for 16,200 baseball caps with the logo of East Texas University (ETU) to be purchased by the ETU alumni association. The ETU alumni association is planning to use the caps as gifts and to sell some ofthe caps at alumni events in celebration ofthe university's recent national championship by its baseball team. Sherman's full manufacturing cost per hat is $4.20, which includes $2.10 xed overhead cost related to plant capacity and equipment. ETU has made a firm offer of $41,000 for the hats, and Sharman, considering the price to be far below production costs, decides to decline the offer. Required: 1~a. Determine the total cost of the special order. Total cost of the special order r 1-b. In terms of maximizing short-term operating profit, did Sharman make the wrong decision in declining the offer from ETU? 0 Yes 0 No Vista Company manufactures electronic equipment. In 2021, it purchased from an outside supplier the special switches used in each of its products. The supplier charged Vista $2.80 per switch. As an alternative, Vista's CEO considered purchasing either machine A or machine B so the company could manufacture its own switches. The CEO decided at the beginning of 2022 to purchase machine A, based on the following data: Machine A Machine 13 Annual fixed cost (depreciation) $ 149,000 S 218,000 Variable coat per switch 0.80 0.20 Required: 1. Assume that machine A has not yet been purchased. What is the annual volume that would make the company indifferent between the two decision alternatives (i.e., purchasing and then using machine A to make the switches versus purchasing the switches from the outside vendor)? 2. Assume that machine A has already been purchased. Is it preferable to use machine A to make the switches or to purchase the switches from the external supplier? 3. Assume that machine A has already been purchased. At what annual volume level should Vista consider replacing machine A with machine B? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Assume that machine A has not yet been purchased. What is the annual volume that would make the company indifferent between the two decision alternatives (i.e., purchasing and then using machine A to make the switches versus purchasing the switches from the outside vendor)? (Do not round intermediate calculations. Round your final answer up to the nearest whole number.) Indifference point. r unitslyear Required 2 > Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Assume that machine A has already been purchased. Is it preferable to use machine A to make the switches or to purchase the switches from the external supplier? OUse machine A to make the switches. OPurchase the switches from the external supplier. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Assume that machine A has already been purchased. At what annual volume level should Vista consider replacing machine A with machine B? (Do not round intermediate calculations. Round your nal answer up to the nearest whole number.) Volume level units (per year) Barbour Corporation, located in Buffalo, New York, is a retailer of hightech products and is known for its excellent quality and innovation. Recently, the firm conducted a relevant cost analysis of one of its product lines that has only two products, T-1 and T2. The sales for T2 are decreasing and the purchase costs are increasing. The firm might drop T2 and sell only T'I. Barbour allocates xed costs to products on the basis of sales revenue. When the president of Barbour saw the income statements (see below), he agreed that T-2 should be dropped. If T-2 is dropped, sales of T-1 are expected to increase by 'IO percent next year, but the rm's cost structure will remain the same. Tl TZ Sales $ 260,000 $ 308,000 Variable costs: Cost of goods sold 82,000 154,000 Selling & administrative 22,000 62,000 Contribution margin $ 156,000 $ 92,000 Fixed expenses: Fixed corporate costs 72,000 87,000 Fixed selling and administrative 24,000 33,000 Total fixed expenses 5 96,000 $ 120,000 Operating income 5 60,000 $ (28,000) Required: 1. Find the expected change in annual operating income by dropping T-2 and selling only T-1. 2. By what percentage would sales from T1 have to increase in order to make up the financial loss from dropping TZ? (Enter your answer as a percentage rounded to 2 decimal places (i.e. 0.1234 should be entered as 12.34).) 3. What is the required percentage increase in sales from T-1 to compensate for lost margin from T-2, iftotal xed costs can be reduced by $46,500? (Enter your answer as a percentage rounded to 2 decimal places (i.e. 0.1234 should be entered as 12.34).) Required % increase in sales from T-1 % Required % increase in sales from T-1 %