Question
MSI's educational products are currently sold without any supplemental materials. The company is considering the inclusion of instructional materials such as an overhead slide
MSI's educational products are currently sold without any supplemental materials. The company is considering the inclusion of instructional materials such as an overhead slide presentation, potential test questions, and classroom bulletin board materials for teachers. A summary of the expected costs and revenues for MSI's two options follows: Estimated demandi Estimated sales price CD Only 50,000 units CD with Instructional Materials 50,000 units $35.00 Estimated cost per unit Direct materials Direct labor Fixed manufacturing overhead Unit manufacturing cost Variable manufacturing overhead Additional development cost $ 20.00 $ 1.25 $ 1.75 2.50 5.50 2.50 5.75 2.00 2.00 $ 8.25 $ 15.00 $65,000 Required: 1. Based on the given data, compute the increase or decrease in profit that would result if instructional materials were added to the CDs. 2. Should MSI add the instructional materials or sell the CDs without them? 3-a. Suppose that the higher price of the CDs with instructional materials is expected to reduce demand to 32,000 units. Complete the table given below based on Requirement 1 and 2 data. 3-b. Should MSI add the instructional materials or sell the CDs without them? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A Req 38 Based on the given data, compute the increase or decrease in profit that would result if instructional materials were added to the CDs.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started