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Macro Electronics manufactures low - cost , consumer - grade computers. It sells these computers to various electronics retailers to market under store brand names.
Macro Electronics manufactures lowcost consumergrade computers. It sells these computers to various electronics retailers to market under store brand names. It manufactures two computers, the Lightning and the Lightning which differ in terms of speed, memory, and hard drive capacity. The following information is available:
Lightning Lightning
Direct materials $ $
Direct labor
Variable overhead
Fixed overhead
Total cost per unit $ $
Selling price
Units produced and sold
The average wage rate is $ per hour. The plant has a capacity of direct laborhours.
Required:
A nationwide discount chain has approached Macro with an offer to buy Lightning computers and Lightning computers if the unit prices are lowered to $ and $ respectively.
If Macro accepts the offer, how many direct laborhours will be required to produce the additional computers?
How much will the profit increase or decrease if Macro accepts this proposal? All other prices will remain the same.
Suppose that the customer has offered instead to buy up to each of the two models at $ and $ respectively.
How many of each product should be manufactured and sold? Assume current demand will not be affected by the special order. Also assume that the company cannot increase its production capacity to meet the extra demand.
How much will the profits change if this order is accepted instead?
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