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.

Acquired $$750,000$ of cash from the owners.

Purchased $$270,000$ of manufacturing equipment. The equipment has a $$30,000$ salvage value and a four$-$year useful life.

The company started and completed $5,000$ modems. Direct materials purchased and used amounted to $$40$ per unit.

Direct labor costs amounted to $$25$ per unit.

The cost of manufacturing supplies amounted to $$4$ per unit.

The company paid $$50,000$ to rent the manufacturing facility.

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.$)$

The sales staff was paid a $$6$ per unit sales commission.

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.

Administrative expenses consisting of office rental and salaries amounted to $$71,950.$

Required

$1.$ 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?

$2.$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?

$3.$ Assume that Magnificent Modems expects production and sales to grow to $10,000.$ At this volume of production, should Magnificent buy the modems?