Problem 6-30A Comprehensive problem including special order, outsourcing, and LO 6-2, 6-3, 6-4 segment elimination decisions eXcel Lang Corporation makes and sells state-of-the-art electronics products One of its segments pro- duces The Math Machine, an inexpensive caleulator. The company's chief accountant recentlhy prepared the following income statement showing annual revenues and expenses associated with the segment's operating activities. The relevant range for the production and sale of the calcula- tors is between 30,000 and 60,000 units per year CHECK FIGURE a. CM $5,000 Revenue (40,000 units S9.00) Unit-level variable costs $360,000 Materials cost (40,000 $2.25) Labor cost (40,000 x $1.00) Manufacturing overhead (40,000 x $1.00) Shipping and handling (40,000 S029 Sales commissions (40,000 x $1.00) 90,000) (40,000) (40,000) (10,000) 140,000 Contribution margin Fixed expenses Advertising costs Salary of production supervisor Allocated companywide facility-level expenses 20,000) (60,000) (80,000 Net loss Required (Consider each of the requirements independently.) a. A large discount store has approached the owner of Lang about buying 5,000 calculators It would replace The Math Machine's label with its own logo to avoid affecting Lang's existing customers. Because the offer was made directly to the owner, no sales commissions on the transaction would be involved, but the discount store is willing to pay only $$5.50 per calculator. Based on quantitative factors alone, should Lang accept the special order? Support your answer with appropriate computations. Specifically, by what amount would the special order increase or decrease profitability? Chapter 6 b. Lang has an opportunity to buy the 40,000 calculators it currently makes from a reliable competing manufacturer for $5.60 each. The product meets Lang's quality standards. Lang could continue to use its own logo, advertising program, and sales force to distribute the products. Should Lang buy the calculators or continue to make them? Support your answer with appropriate computations Specifically, how much more or less would it cost to buy the calculators than to make them? Would your answer change if the volume of sales were increased to 60,000 units? c. Because the calculator division is currently operating at a loss, should it be eliminated from he company's operations? Support your answer with appropriate computations. Specifically, by what amount would the segment's elimination increase or decrease profitability