Question
Mission Electronics manufactures and sells basic DVD players for sale under various generic store brand names. The cost of one of their models follows: Materials
Mission Electronics manufactures and sells basic DVD players for sale under various generic store brand names. The cost of one of their models follows: |
Materials | $ | 19.90 | |
Labor | 13.90 | ||
Variable overhead | 6.90 | ||
Fixed overhead ($3,705,100 per year; 469,000 units per year) | 7.90 | ||
Total | $ | 48.60 | |
Pacific Cash & Carry, a chain of low-price electronic sales and rental outlets, has asked Mission to supply them with 38,000 players for a special promotion Pacific is planning. Pacific has offered to pay Mission a unit price of $54 per DVD player. The regular selling price is $79. The special order would require some modification to the basic model. These modifications would add $5.90 per unit in material cost, $3.40 per unit in labor cost, and $2.40 in variable overhead cost. Although Mission has the capacity to produce the 38,000 units without affecting its regular production of 469,000 units, a one-time rental of special testing equipment to meet Pacifics requirements would be needed. The equipment rental would be $68,800 and would allow Mission to test up to 69,000 units. |
Required: | |
a. | Prepare a schedule to show the impact of filling the Pacific order on Missions profits for the year.(Enter your answers in thousands of dollars. Round your answers to 1 decimal place.) |
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