Problem 4-53 (Algo) Special Order (LO 4-1, 2) Unter Components manufactures low.cost navigation systems for installation in ride-sharing cars. It sells these systems to various car services that can customize them for their locale and business model. It manufactures two systems, the Star100 and the Star150, which differ in terms of capabilities. The following information is available. Costs per unit Star100 Star150 Direct materials $ 62 $ 72 Direct labor 40 50 Variable overhead 20 25 Fixed overhead 87 122 Total cost per unit $ 209 $ 264 Price $ 390 $ 400 Units sold 4.000 2.000 The average wage rate is $25 per hour. Variable overhead varies with the quantity of direct labor-hours. The plant has a capacity of 20,000 direct labor-hours, but current production uses only 10,400 direct lobor-hours. Required: a. A nationwide car sharing service has offered to buy 2,600 Start systems and 2,600 Start50 systems if the price is lowered to $210 and $260, respectively, per unit -1. if Unter accepts the offer, how many direct labor-hours will be required to produce the additional systems? a-2. Complete the following table to determine the differential profit increase for decrease) in Unter accepts this proposal. Prices on regular sales will remain the same. b-1. Suppose that the car sharing has offered instead to buy 3,600 each of the two models at $210 and $260, respectively. This customer will purchase the 3,600 units of each model only in an all-or-nothing deal. That is, Unter must provide all 3,600 units of each model or none. Unter's management has decided to fill the entire special order for both models. In view of its capacity constraints, Unter will reduce sales to regular customers as needed to fill the special order. Complete the table below to determine the total contribution margin with the special order added. b-2. How much will the profits change if the order is accepted? Assume that the company cannot increase its production capacity to $210 and $260, respectively, per unit. a-1. If Unter accepts the offer, how many direct labor-hours will be required to produce the additional systems? a-2. Complete the following table to determine the differential profit increase for decrease) if Unter accepts this proposal Prices on b.1. Suppose that the car sharing has offered instead to buy 3,600 each of the two models at $210 and $260, respectively. This customer will purchase the 3,600 units of each model only in an all-or-nothing deal. That is, Unter must provide all 3,600 units of each model or none. Unter's management has decided to fill the entire special order for both models. In view of its capacity constraints, Unter will reduce sales to regular customers as needed to fill the special order. Complete the table below to determine the total contribution margin with the special order added. b-2. How much will the profits change if the order is accepted? Assume that the company cannot increase its production capacity to 0-1. Assume that, in the situation presented in requirement b-1, the plant can work overtime. Direct labor costs for the overtime production increased to $37.50 per hour. Variable overhead costs for overtime production are $6 per hour more than for normal production. Complete the table below to determine the total contribution margin. c-2. How much will the profits change in this situation? meet the extra demand. Unter Components manufactures low.cost navigation systems for installation in ride-sharing cars. It sells these systems to various cor services that can customize them for their locale and business model. It manufactures two systems, the Star100 and the Star150, which differ in terms of capabilities. The following information is available Costs per Unit Direct materials Direct labor Variable overhead Fixed overhead Total cost per unit Price Units sold Star 100 $ 62 40 20 87 $ 209 5300 4.000 Star150 $ 72 50 25 117 $ 264 $ 400 2,000 The average wage rate is $25 per hour. Variable overhead varies with the quantity of direct labor-hours. The plant has a capacity of 20,000 direct labor hours, but current production uses only 10,400 direct labor-hours Required: a. A nationwide cor-sharing service has offered to buy 2,600 Star100 systems and 2,600 Star150 systems if the price is lowered to $210 and $260, respectively, per unit a-1. If Unter accepts the offer , how many direct labor-hours will be required to produce the additional systems? a-2. Complete the following table to determine the differential profit increase for decrease) i Unter accepts this proposal Prices on regular sales will remain the same. b.1. Suppose that the car sharing has offered instead to buy 3,600 each of the two models at $210 and $260, respectively. This customer will purchase the 3,600 units of each model only in an all-or nothing deal. That is, Unter must provide all 3,600 units of each model or none. Unter's management has decided to fill the entire special order for both models. In view of its capacity constraints, Unter will reduce sales to regular customers as needed to fill the special order. Complete the table below to determine the total contribution margin with the special order added. b-2. How much will the profits change if the order is accepted? Assume that the company cannot increase its production capacity to meet the extra demand 6-1. Assume that, in the situation presented in requirement b-1, the plant can work overtime. Direct labor costs for the overtime production increased to $37.50 per hour. Variable overhead costs for overtime production are $6 per hour more than for normal -2. Complete the following table to determine the differential profit increase for decrease) if Unter accepts this proposal. Prices on regular sales will remain the same b-1. Suppose that the car sharing has offered instead to buy 3,600 each of the two models at $210 and $260, respectively. This customer will purchase the 3,600 units of each model only in an all-or nothing deal. That is, Unter must provide all 3.600 units of each model or none. Unter's management has decided to fill the entire special order for both models. In view of its capacity constraints, Unter will reduce sales to regular customers as needed to fill the special order. Complete the table below to determine the total contribution margin with the special order added, b-2. How much will the profits change if the order is accepted? Assume that the company cannot increase its production capacity to meet the extra demand c-1. Assume that, in the situation presented in requirement b1, the plant can work overtime Direct labor costs for the overtime production increased to $37.50 per hour. Variable overhead costs for overtime production are $6 per hour more than for normal production Complete the table below to determine the total contribution margin c-2. How much will the profits change in this situation? 2:51 Complete this question by entering your answers in the tabs below. Reg A2 Reg AL Reg 31 Reg 02 Reci Rega A nationwide car sharing service has offered to buy 2,600 Star 100 systems and 2,600 Staris0 systems if the price is lowered to $210 and $260, respectively, per unit A1. Unter accepts the offer, how many drect labor-hours wat be required to produce the additional systems? Dim bor hours Reg A2 >
