MSIs 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 MSIs two options follows:
| | CD Only | CD with Instructional Materials |
| Estimated demand | | | 34,000 | units | | | 34,000 | units | |
| Estimated sales price | | $ | 26.00 | | | $ | 45.00 | | |
| Estimated cost per unit | | | | | | | | | |
| Direct materials | | $ | 4.25 | | | $ | 6.75 | | |
| Direct labor | | | 6.50 | | | | 10.50 | | |
| Variable manufacturing overhead | | | 6.50 | | | | 9.75 | | |
| Fixed manufacturing overhead | | | 7.00 | | | | 7.00 | | |
| Unit manufacturing cost | | $ | 24.25 | | | $ | 34.00 | | |
| Additional development cost | | | | | | $ | 105,000 | | |
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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 21,000 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?
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: CD Only 34,000 units $ 26.00 CD with Instructional Materials 34,000 units $ 45.00 Estimated demand Estimated sales price Estimated cost per unit Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit manufacturing cost Additional development cost $ 4.25 6.50 6.50 7.00 $ 24.25 $ 6.75 10.50 9.75 7.00 $ 34.00 $105,000 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 21,000 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. Reg 1 Req 2 Reg Reg 3B Based on the given data, compute the increase or decrease in profit that would result if instructional materials were added to the CDs. CD Only CD with Instructional Materials Incremental Sales Revenue Variable Costs Contribution Margin Additional Development Costs Differential Profit (Loss) Req Reg 2 > 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 21,000 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. Reg 1 Req 2 Reg 3A Reg 38 Should MSI add the instructional materials or sell the CDs without them? Add the Instructional Materials Should MSI add the instructional materials or sell the CDs without them? 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 21,000 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. Reg 1 Reg 2 Req Req 3B Suppose that the higher price of the CDs with instructional materials is expected to reduce demand to 21,000 units. Complete the table given below based on Requirement 1 and 2 data. CD Only CD with Instructional Materials Incremental Sales Revenue Variable Costs Contribution Margin Additional Development Costs Differential Profit (Loss) 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 21,000 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. Reg 1 Req2 Reg 3A Req 3B Should MSI add the instructional materials or sell the CDs without them? Should MSI add the instructional materials or sell the CDs without them? Sell the CDs without Instructional Materials
