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Masked Productions was established two years ago to produce N95 facemasks. Production capacity is 45,000 facemasks, although the company is still trying to build
Masked Productions was established two years ago to produce N95 facemasks. Production capacity is 45,000 facemasks, although the company is still trying to build its client base and is currently operating at 70 per cent capacity. Fixed production costs are $195,000 and variable production costs are $9 per unit. Facemasks are generally sold through Pharmacy franchises at price of 26 each. Masked Productions has received an offer from ACT Health to purchase a one-off order of 16,500 masks for $15 per unit. The ACT Health order will require additional delivery costs of $2 per mask. Required: (Round your answers to whole dollars). 1. What is the current contribution margin for Masked Productions? $ 2. What would be the contribution margin for the special order? 3. If Masked Productions wanted to maximise profits for the current year, how many facemasks will be sold to ACT Health? facemasks. How much profit would these sales contribute to the bottom line? +A $ profit. (Note if the special order should not proceed, enter 0 for both answers)
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