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Pulse Cycles rejected this price and offered to purchase the 500 scooters at a price of $45,000. The following additional information is available: - Razor
Pulse Cycles rejected this price and offered to purchase the 500 scooters at a price of $45,000. The following additional information is available: - Razor has sufficient excess capacity to produce the scooters. - Factory overhead is applied on the basis of direct labor dollars. - Selling and administrative expenses are budgeted as follows: Fixed: $3,000,000 per year Variable: $10 per unit manufactured and soid Required Note: Do not use negative signs with your answer. a. The president of Razor wants to know if he should allow Pulse Cycles to have the scooters for $45,000. Determine the effect on profits of accepting Pulse Cycles' offer. $ b. Assume Razor is operating at capacity and could sell the 500 scooters at its regular markup. 1. Determine the opportunity cost of accepting Pulse Cycles' offer. 2. Determine the effect on profits of accepting Pulse Cycles' offer
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