Que 4 Davis Kitchen Supply produces stoves for commercial kitchens. The costs to manufacture and market the stoves st the company's normal volume of 6,000 units per month are shown in the following table unit manufacturing costs Variable waterials Variable labor Variable overhead Fixed Overhead Total unit manufacturing costs unit keting costs Variable Fixed Total unit marketing costs Total unit costs | #| $ 182 $ 253 Unless otherwise stated, assume that no connection exists between the situation described in each questions each is Independent. Unless otherwise sisted, assume a regular selling price of $404 per unit. Ignore Income taxes and other costs that are not mentioned In the table or in the question itself. Required: a. Market research estimates that volume could be increased to 7,000 units, which wel within production capacity limitations if the price were cut from $404 to $359 per unit. Assuming that the cost behavior patterns Impled by the data in the table se correct --1 What would be the impact on monthly sales, costs, and income? --2 Would you recommend taking this action b. On March 1, the federal government offers Davis contract to supply 1000 units to military bases for a March 31 delivery. Because of an unusually large number of rush orders from its regular customers, Davis plans to produce 2,000 units during March, which will use all available capacity. If it accepts the government order, it would lose 1000 units normally sold to regular customers to a competitor. The government contract would reimburse "Share of March manufacturing costs" plus pays $57,000 fixed fee (profit. (No variable marketing costs would be incurred on the government's units. Assuming that the goverment's share of March manufacturing costs will be the proportionate faced manufacturing cost, what impact would accepting the govemment contract have on March Income? c. Devishes an opportunity to enter a highly competitive foreign market. An attraction of the foreign market is that its demands greatest when the domestic market's demand is quite low; thus, idle production facilities could be used without affecting domestic business. An order for 2.000 units is being sought to below-normal price to enter this market for this order shipping costs will total $33 per unit; total marketing costs to obtain the contract will be $2.000. No other variable marketing costs would be required on this order, and it would not affect domestic business. What is the minimum unit price that Davis should consider for this order of 2.000 units? d. An Inventory of 460 units of an obsolete model of the stove remains in the stockroom. There must be sold through regular channels (thus incurring variable marketing costs) at reduced prices or the Inventory will soon be valueless. What is the minimum scceptable seling price for these units e-1 A proposals received from an outside contractor who will make and ship 2000 stoves per month directly to Davis's customers as orders are received from Davi's salesforce. Davis's fixed marketing costs would be unaffected, but variable marketing costs would be cut by 30 percent for these 2.000 units produced by the contractor. Davis's plant would operate st two-thirds of its normal level. and total fixed manufscturing costs would be cut by 30 percent. What In-house unit cost should be used to compare with the quotation received from the supplier Assume the payment to the outside contractor is $208. --2 Should the proposal be accepted for a price that is payment to the outside contractor of $209 per unit -1. A proposal is received from an outside contractor who will make and ship 2.000 stoves per month directly to Davis's customers orders are received from Davis's salesforce. Davis's fixed marketing costs would be unaffected, but variable marketing costs would be cut by 30 percent for these 2000 units produced by the contractor. The idle facilites would be used to produce 1600 modified stoves per month for use in extreme climstes. These modified stoves could be sold for $443 esch, while the costs of production would be $268 per unit variable manuscturing expense. Variable marketing costs would be $43 per unit. Pored marketing and manufacturing costs would be unchanged whether the original 6.000 regular stoves were manufactured or the mix of 4,000 regular stoves plus 1.600 modified stoves were produced. Whst in-house unit cost should be used to compare with the quotation received from the outside contractor? Assume the payment to the outside contractor is $200 f-2 Should the proposal be accepted for a price of $209 per unit to the outside contractor Complete this question by entering your answers in the tabs below. Ray A1 RA RE1 RE2 Re F1 Reg F2 Market research estimates that volume could be increased to 7,000 units, which is well within production capacity limitations the price were out from $404 to $359 per unit. Assuming that the most behavior patterns implied by the data in the table are correct. Al. What would be the impact on monthly sales, costs, and income? (Select option "Increase or decresce", keeping before price reduction as the base. Select "none" if there is no effect.) Show less Before Prios Reduction After Price Reduction Impact Sale price Quantity Revenue Variable manufacturing costs Variable marketing costs Contribution margin Fund manufacturing costs Found marketing costs Income ROGAI Raq A2 > Que 4 Davis Kitchen Supply produces stoves for commercial kitchens. The costs to manufacture and market the stoves st the company's normal volume of 6,000 units per month are shown in the following table unit manufacturing costs Variable waterials Variable labor Variable overhead Fixed Overhead Total unit manufacturing costs unit keting costs Variable Fixed Total unit marketing costs Total unit costs | #| $ 182 $ 253 Unless otherwise stated, assume that no connection exists between the situation described in each questions each is Independent. Unless otherwise sisted, assume a regular selling price of $404 per unit. Ignore Income taxes and other costs that are not mentioned In the table or in the question itself. Required: a. Market research estimates that volume could be increased to 7,000 units, which wel within production capacity limitations if the price were cut from $404 to $359 per unit. Assuming that the cost behavior patterns Impled by the data in the table se correct --1 What would be the impact on monthly sales, costs, and income? --2 Would you recommend taking this action b. On March 1, the federal government offers Davis contract to supply 1000 units to military bases for a March 31 delivery. Because of an unusually large number of rush orders from its regular customers, Davis plans to produce 2,000 units during March, which will use all available capacity. If it accepts the government order, it would lose 1000 units normally sold to regular customers to a competitor. The government contract would reimburse "Share of March manufacturing costs" plus pays $57,000 fixed fee (profit. (No variable marketing costs would be incurred on the government's units. Assuming that the goverment's share of March manufacturing costs will be the proportionate faced manufacturing cost, what impact would accepting the govemment contract have on March Income? c. Devishes an opportunity to enter a highly competitive foreign market. An attraction of the foreign market is that its demands greatest when the domestic market's demand is quite low; thus, idle production facilities could be used without affecting domestic business. An order for 2.000 units is being sought to below-normal price to enter this market for this order shipping costs will total $33 per unit; total marketing costs to obtain the contract will be $2.000. No other variable marketing costs would be required on this order, and it would not affect domestic business. What is the minimum unit price that Davis should consider for this order of 2.000 units? d. An Inventory of 460 units of an obsolete model of the stove remains in the stockroom. There must be sold through regular channels (thus incurring variable marketing costs) at reduced prices or the Inventory will soon be valueless. What is the minimum scceptable seling price for these units e-1 A proposals received from an outside contractor who will make and ship 2000 stoves per month directly to Davis's customers as orders are received from Davi's salesforce. Davis's fixed marketing costs would be unaffected, but variable marketing costs would be cut by 30 percent for these 2.000 units produced by the contractor. Davis's plant would operate st two-thirds of its normal level. and total fixed manufscturing costs would be cut by 30 percent. What In-house unit cost should be used to compare with the quotation received from the supplier Assume the payment to the outside contractor is $208. --2 Should the proposal be accepted for a price that is payment to the outside contractor of $209 per unit -1. A proposal is received from an outside contractor who will make and ship 2.000 stoves per month directly to Davis's customers orders are received from Davis's salesforce. Davis's fixed marketing costs would be unaffected, but variable marketing costs would be cut by 30 percent for these 2000 units produced by the contractor. The idle facilites would be used to produce 1600 modified stoves per month for use in extreme climstes. These modified stoves could be sold for $443 esch, while the costs of production would be $268 per unit variable manuscturing expense. Variable marketing costs would be $43 per unit. Pored marketing and manufacturing costs would be unchanged whether the original 6.000 regular stoves were manufactured or the mix of 4,000 regular stoves plus 1.600 modified stoves were produced. Whst in-house unit cost should be used to compare with the quotation received from the outside contractor? Assume the payment to the outside contractor is $200 f-2 Should the proposal be accepted for a price of $209 per unit to the outside contractor Complete this question by entering your answers in the tabs below. Ray A1 RA RE1 RE2 Re F1 Reg F2 Market research estimates that volume could be increased to 7,000 units, which is well within production capacity limitations the price were out from $404 to $359 per unit. Assuming that the most behavior patterns implied by the data in the table are correct. Al. What would be the impact on monthly sales, costs, and income? (Select option "Increase or decresce", keeping before price reduction as the base. Select "none" if there is no effect.) Show less Before Prios Reduction After Price Reduction Impact Sale price Quantity Revenue Variable manufacturing costs Variable marketing costs Contribution margin Fund manufacturing costs Found marketing costs Income ROGAI Raq A2 >