PART C-TOPICS 7- 10 30 MARKS) Question C.1 (12 Marks) Define relevant costs. Why are historical costs irrelevant? a. factors in decision making. Why b. Distinguish between guantitative and qual are qualitative factors important in decision Sunny Inc. produces 40 000 MP3 Players each month. The market price per MP3 c. Player is $40. The following data is relevant to MP3 Players' production and sales in November 2018: Direct material costs $389 870 $265 900 Direct labor costs Variable manufacturing overhead costs $224 230 S3.40 Variable operating cost per MP3 Player Fixed manufacturing costs per MP3 Player $6.8 $98 000 Fixed marketing and administrative costs Sunny Inc. has a monthly production capacity of 50 000 MP3 Players. Fast Electronics offered to buy 8 000 MP3 Players, one-time-only special-order, from Sunny Inc. at $25 each. Required: Show the comparative Contribution Income Statements for November 2018-'Operating profit without special order' and Operating profit with the special order. On the basis of financial onsiderations alone, should Sunny Inc. accept the one-time-only special-order from Fast lectronics? PART C-TOPICS 7- 10 30 MARKS) Question C.1 (12 Marks) Define relevant costs. Why are historical costs irrelevant? a. factors in decision making. Why b. Distinguish between guantitative and qual are qualitative factors important in decision Sunny Inc. produces 40 000 MP3 Players each month. The market price per MP3 c. Player is $40. The following data is relevant to MP3 Players' production and sales in November 2018: Direct material costs $389 870 $265 900 Direct labor costs Variable manufacturing overhead costs $224 230 S3.40 Variable operating cost per MP3 Player Fixed manufacturing costs per MP3 Player $6.8 $98 000 Fixed marketing and administrative costs Sunny Inc. has a monthly production capacity of 50 000 MP3 Players. Fast Electronics offered to buy 8 000 MP3 Players, one-time-only special-order, from Sunny Inc. at $25 each. Required: Show the comparative Contribution Income Statements for November 2018-'Operating profit without special order' and Operating profit with the special order. On the basis of financial onsiderations alone, should Sunny Inc. accept the one-time-only special-order from Fast lectronics
