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Q3. Masaba Manufacturing makes a single product, electric shavers, which are carried by many retail establishments. A projected income statement for the company's operations for
Q3. Masaba Manufacturing makes a single product, electric shavers, which are carried by many retail establishments. A projected income statement for the company's operations for the coming year (at a regular level of production and sales of 300,000 shavers) is shown below. Revenues @ $20 a shaver $6,000,000 Cost of goods manufactured and sold: Direct materials (1 lb per shaver) $ 900,000 Direct labor 1,200,000 Variable manufacturing overhead 600,000 Fixed manufacturing overhead _3_0_Q.QQQ _3.0_0_0.QQ(1 Gross margin $3,000,000 Operating expenses: Selling 8: admin. expenses Sales commission (5% of revenue) 300,000 Fixed S&A 1 590 000 1 890 000 Net Income $1,110,000 Part 1. Masaba has been approached by a well-known retailer who would like to purchase 30,000 shavers from Masaba on a special-order basis at $14 per shaver. There would be no impact on regular sales volume and Masaba has the additional production capacity. The retailer wants its brand name on the shaver, which would require Masaba to incur a lump sum retooling cost of $18,000 and an additional $0.50 of Var. Manf. Overhead for each of the special order shavers. There would be no sales commission on the order. Should the order be accepted? Frame the analysis as \"Accept order\" versus \"Reject order\". If your analysis is not consistent with this framing, you will not get any points. Part 2. Continuing with part 1 above except that Masaba's capacity is limited to the production of 300,000 shavers. Accordingly, the special order will displace current business. What is the minimum price per shaver at which the order should be accepted? Again, frame the analysis as \"Accept order" versus \"Reject order\". If your analysis is not consistent with this framing, you will not get any points
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