Required information The following information applies to the questions displayed below) Design You Inc. (DY) has built up its name in the construction Industry as a manufacturer of quality wooden architectural pieces. They pride themselves on using a "no short cut" approach to the crafting of their high quality and unique designed products. DVI often receives special orders from various retall groups. For each type of product sold, each unit is carefully monitored to have the design and quality advertised for that type of product. To reassure clients of their quality, they are Invited to their workshop so that new and repeat customers can see their quality and services for themselves. DYI's operating capacity is 23,000 units per month, and it currently is selling 21,000 units manufactured in 21 batches of 1,000 units each. The company just received a request for a special order of 5,200 units of its product offering for $131,000 from Luca Retail Delivery and other packaging and distribution services would cause a one time $1.600 cost for DYL. The special ordet would be processed in two batches of 2.600 units each (Most of the batch-level costs in this case are short-term fixed costs, such as depreciation and salaries. No incremental batch-level costs are expected for this special order) There would be no variable selling costs but the production costs would be the same, Given DYI's current operations, the following data was collected: Sales and production cost data for 21,000 units, per unit: Sales price Variable manufacturing costs Variable selline costs Fixed manufacturing costs Fixed marketing costs $41 18 4 10 5 Because the order would be displayed in one of the upcoming wooden art galleries, Luca Retail requires that Dy fill the entire order of 5,200 units. No marketing costs would be occurred with the special order Acume that the $10 00 fixer manufacturinn overheart rost ner unit consists of facility.leuplencs $700 at the 1000 monitored to have the design and quality advertised for that type of product. 1o reassure clients of their quality, they are Invited to their workshop so that new and repeat customers can see their quality and services for themselves. DYI's operating capacity is 23,000 units per month, and it currently is selling 21.000 units manufactured in 21 batches of 1.000 units each. The company just received a request for a special order of 5.200 units of its product offering for $131.000 from Luca Retail Delivery and other packaging and distribution services would cause a one-time $1,600 cost for DYI. The special order would be processed in two batches of 2.600 units each, (Most of the batch-level costs in this case are short term fixed costs, such as depreciation and salaries. No incremental batch-level costs are expected for this special order) There would be no variable selling costs but the production costs would be the same Given DYIs current operations, the following data was collected Sales and production cost data for 25.000 unit. Sales price Variable manufacturing costs Variable selling costs 4 Fixed manufacturing costs Fixed marketing costs Because the order would be displayed in one of the upcoming wooden art galleries. Luca Retail requires that Dithe entire order of 5.200 units. No marketing costs would be occurred with the special order. Assume that the $10.00 fixed manufacturing overhead cost per unit consists of facility level costs ($700/unit at the 21.000 unit output level), with the remainder being setup related te, batch-level) costs. Note that the facility-level fixed costs do not vary in total, with either the number of units produced or the number of batches produced during a period. Any loss for the number of units sold in the regular sales would not result into any batch-related cost saving or reduction 5.41 1 10 emead cost per unit consists of facility-level costs $7.00/unit at the 21000- unit output level), with the remainder being setup-related fie, batch-level) costs. Note that the facility level fixed costs do not vary in total, with either the number of units produced or the number of batches produced during a period. Any loss for the number of units sold in the regular sales would not result into any batch-related cost saving or reduction Required: 1. Calculate the total relevant cost for filling this special sales order? 2. If the special order is accepted, what would be the change in operating Income? 3. Calculate the breakeven selling price per unit for the special sales order? 4. For both the current situation and assuming the special order is accepted at the breakeven price determined in requirement 3 above, prepare comparative Income statements, using the contribution format. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 What is the total relevant cost of filling this special sales order? Total relevant cost
