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Mohave Corporation makes several varieties of beach umbrellas and accessories. It has been approached by a company called Lost Mine industries about producing a special
Mohave Corporation makes several varieties of beach umbrellas and accessories. It has been approached by a company called Lost Mine industries about producing a special order for a custom umbrella called the Ultimate Shade {US}. The special-order umbrellas with the Lost Mine Company logo would be distributed to participants at an upcoming convention sponsored by Lost Mine. Lost Mine offered to buy 2,100 US umbrellas at a price of $17r each. Mohave currently has the excess capacity necessary to accept the offer. The following information is related to the production of the US umbrella: Direct materials 9; 3.88 Direct labor 4.88 Variable manufacturing overhead 4.88 Fixed manufacturing overhead 2.58 Total cost $ 13.58 Regular sales price $ 25.88 Required: 1. Compute the incremental prot {or loss) from accepting the special order. 2. Should Mohave accept the special order? 3. Suppose the special order had been to purchase 2,600 umbrellas for $15.00 each. Recompute the incremental prot {or loss) from accepting the special order under this scenario. 4. Assume Mohave is operating at full capacity. Calculate the special-order price per unit at which Mohave would be indifferent between accepting or rejecting the special order. Complete this qu-tlon by enteran your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Compute the Incremental profit (or loss) from accepting the special order. _
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