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LO 10 ) 10.28 Ontrack Company produces compasses for cross-country skiing. The Idle capacity = 100%-85% = 15% production capacity is 45 000 compasses, and the company is currently operating at 85 per cent in unit = 15% x 45,000 = 6750 unit capacity. Variable manufacturing costs are $10 per unit. Fixed manufacturing costs are $425 000. The compasses are normally sold directly to Outdoor Tent City at $25 each. Ontrack has an offer b CM normal outdoor tent city 25-10 15 CM special order 13-10 3 from Neverlost Company (a foreign wholesaler) to purchase an additional 5000 compasses at $13 por unit. Roquired d. Special order 10,000 ---> the company has to give up part of the "normal order" to fulfill the special order a. Calculate the available production capacity. Special order 10000 b. Calculate the contribution margin per unit for both the current production of compasses and idle capacity 6750 the special order compasses. "normal order" to be given up 3250 c. Should the special order be accepted? Show calculations. d. What is the opportunity cost if Neverlost required 10000 compasses? CM difference = "normal order" - "special order" e. Would you recommend the special order if Neverlost Company required 10000 compasses? (25-10) - (13-10) LO 2, 6 10.29 Ryans Music provides individual music lessons in the homes of clients. The 12 "loss" following data are provided with respect to the last 12 months of activity ending 30 June 2015. e. Additional from Neverlost 10,000 unit x $3 30000 "loss" sacrifying from "normal order" 3250 X $15 48750 "loss" -18750 LO 10 DO 10.26 In the Whine Company, it costs $30 per unit ($20 variable and $10 fixed) to Variable cost become 20+2= 22 make a product that normally sells for $55. A foreign wholesaler offers to buy 3000 units at $35 sales price = 35 each. The Whine Company will incur special shipping costs of $2 per unit. CM = 35-22 = 13 Required additional CM = 3000 x $13 = 39,000 Assuming that the Whine Company has excess operating capacity, indicate the profit (or loss) it Additional profit for taking the special order