Question
monkey Enterprises manufactures high-end bedroom lamps for retail chains such as Target. The current operations are presented below. monkey Enterprises Income Statement For the year
monkey Enterprises manufactures high-end bedroom lamps for retail chains such as Target. The current operations are presented below.
monkey Enterprises Income Statement For the year ended December 31, 2021 Sales (9,700) ($ 100) $ 970,000 Less Production Costs Direct Materials (9,700) ($ 10) $ 97,000 Direct Labor (9,700) ($ 25) 242,500 Variable Overhead (9,700) ($ 8) 77,600 Fixed Overhead 300,000 Total Production Costs 717,100 Less Variable Selling and Administrative Expenses Variable Selling and Administrative Expenses (9,700) ($ 5) $ 4,850 Fixed Selling and Administrative 100,000 Total Selling and Administrative Expenses 104,850 Net Income $ 148,050
ape Housing approached monkey Enterprises to purchase 100 lamps for $ 60 each for a housing project for Habitat for Humanity. The lamps will be somewhat larger which would increase the direct material costs by $ 2.00 per lamp, but they would be less sophisticated, which would decrease variable conversion costs by 10 percent. The sales commission of $ 1 per lamp (1 percent) would not be required. Shipping costs would be $ 1,400.
1. Calculate the effect on profit if the offer is accepted. 2. Identify a qualitative factor. 3. Calculate the minim price needed to make the opportunity break even (profit = $ 0).
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