Magnificent Modems, Incorporated, makes modem cards that are used in notebook computers. The company completed the following transactions during year 1. All purchases and sales were made with cash. 1. Acquired $750,000 of cash from the owners. 2. Purchased $270,000 of manufacturing equipment. The equipment has a $30,000 salvage value and a four-year useful life. 3. The company started and completed 5,000 modems. Direct materials purchased and used amounted to $40 per unit. 4. Direct labor costs amounted to $25 per unit. 5. The cost of manufacturing supplies amounted to $4 per unit. 6. The company paid $50,000 to rent the manufacturing facility. 7. Magnificent sold all 5,000 units at a cash price of $120 per unit. (Hint. It will be necessary to determine the manufacturing costs in order to record the cost of goods sold.) 8. The sales staff was paid a $6 per unit sales commission. 9. Paid $39,000 to purchase equipment for administrative offices. The equipment was expected to have a $3,000 salvage value and a three-year useful life. 10. Administrative expenses consisting of office rental and salaries amounted to $71,950. Required a. One of Magnificent Modems' sales representatives receives a special offer to sell 1,000 modems at a price of $72 each. Compute relevant cost per unit based on the given information. Should the offer be accepted? b. Magnificent Modems has the opportunity to purchase the modems that it currently makes. The modems can be purchased at a price of $76 each. Assuming the manufacturing equipment has a zero market value, should Magnificent buy the modems? c. Assume that Magnificent Modems expects production and sales to grow to 10,000. At this volume of production, should Magnificent buy the modems? Complete this question by entering your answers in the tabs below. Required A Required B Required C One of Magnificent Modems' sales representatives receives a special offer to sell 1,000 modems at a price of $72 each. Compute relevant cost per unit based on the given information. Should the offer be accepted? Direct materials Direct labor Production supplies Sales commission Total relevant cost Should the offer be accepted? Per Unit < Required A Required B >