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PROBLEM E: AWARD PLUS Award Plus manufactures medals and trophies for winners of athletic competitions and other contests. Award Plus's manufacturing plant has ie capacity
PROBLEM E: AWARD PLUS Award Plus manufactures medals and trophies for winners of athletic competitions and other contests. Award Plus's manufacturing plant has ie capacity to produce 10,000 medals per month. Currently, Award Plus is operating at 75% of available capacity, producing 7,500 medals per month. Pertinent data for this level of operations follows: Medals produced and sold ?'.500 Sellin_ nice $175 - er medal Manufacturin_ $46 er medal Marketim 8.1 administrative $34 1 er medal Variable costs: Direct materials $50 per medal Directlabor $40 uer medal Prot $5 er medal ' Award Plus calculates xed costs per medal by dividing the annual xed cost bytlre number of medals it expects to produce duringthe year. Recently, Award Plus received an inquiry from a national Little League baseball organization about the possibility of producing 1,300 medals next month. The Little League organization plans to give the medals to the winners ofthe upcoming state tournaments. Sinoe there are 50 states, 3 age brackets, and approximately 12 players per team, the organization needs 1,300 medals [i.e., 1,300 = 50 * 3 * 12]. The Little League organization, however. indicates that they are somewhat strapped for cash and can only pay $100 for each medal. REQUIRED a. By how much will Award Plus's prot increase or decrease ifit accepts the special order? Please show all your calculations. b. Assume thatAwaod Plus's manufacturing plant has the capacityto produce only 9,000 medals per month rather than 10,000 medals per month. This means that if Award Plus accepts the special order, it will have to forego sales of 300 medals to its regular customers [i.e.. the special order carrnotbe partially fullled]. How does this information affect your answer to part {b}? That is, by how much will Award Plus' prot increase or decrease if it accepts the special order when plant capacity is only 9,000 medals
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