Problem 14-55 A of Order ILO 144, 145) Miami Industries received an order for a piece of special machinery from Jay Company. Je completed the machine, Jay Company declared bankruptcy, defaulted on the order, and foreid 10 percent deposit paid on the selling price of 572.500 Miami's manufacturing manager identified the contrady incurred in the productos special machinery for Jay Company as follows Dec Mondages Fred Fandamine 507 530 Another company, Kaycell Corporation will buy the special machinery if it is reworked to tell specifications. Miami Industries offered to sell the worked machinery to Kaytell as a special derfor $68,400. Kaytell agreed to pay the price when it takes delivery in two months. The additional de able costs to rework the machinery to kaytell's specifications are as follows: $ 6.200 4200 $10.400 A second alternative available to Miami's management is to convert the special machinery to the dard model, which sells for $62.500. The additional identifiable costs for this conversion are as follows Direct Oecom 3.300 56.150 A third alternative for Miami Industries is to sell the machine as is for a price of 532.000. However, the potential buyer of the unmodified machine does not want it for 60 days. This buyer has offered 57.000 down payment with the remainder due upon delivery The following additional information is available regarding Miami's operations The sales commission rate on sales of standard models is 2 percent, while the rate special orders is 3 percent Normal credit terms for sales of standard models are 2/10,net/30. This means that a customer receives a 2 percent discount if payment is made within 10 days and payment is due no later than 30 days after billing. Most customers take the 2 percent discount Credit terms for a special order are negotiated with the customer The allocation rates for manufacturing overhead and fixed selling and administrative costa follows: . . Manufacturing costs 50% of red tabor cost 25. dubro 10% of the staff are and box and manufacturing ovested costs Ferdeling and administrative costi Normal time required for rework is one month Required 1. Determine the dollar contribution each of the three alternatives will add to Miami Industries before-tax profit 2. If Kaytell makes Miami Industries a counteroffer, what is the lowest price Miami should accept for the reworked machinery from Kaytell? Explain your answer 3. Discuss the influence fixed manufacturing-overhead cost should have on the sales price quoted by Miami Industries for special orders CA adapted