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, the classroom bullentin board materials for teachers. A summary of the expected costs and revenues for MSI's two options follows:

Required:

1. Based on the hiven 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 hugher price of the CDs with instructional materials is expected to reduce demand to 21,000 units. Complete the table given beliw based on the Requirement 1 and 2 data.

3-b. Should MSI add the instructional materials or sell the CDs without them?

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 information Req 1 Req 2 Req Req 3B Based on the given data, compute the increase or decrease in profit that would result if instruct the CDs. CD Only CD with Instructional Materials Incremental Sales Revenue Variable Costs Contribution Margin Additional Development Costs Differential Profit (Loss) Req 2 > Req 1 Req 2 Real Req 3B Suppose that the higher price of the CDs with instructional materials is expected to reduce demand to 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) * Req 2 Req 3B