Sales volume in units 90 19.000 Variable costs 51.800 Contribution margin:200 Fond Profit $5,800 Special ordert Acient wants to buy 20 units at a discounted price of $to per unit. This is a one-time de a short-term decision). You have enough spare capacity ta fut the closer without cutting back on your regular sales 1.400 a) Use the gross approach to decide whether you should take the special orders Stats que no social total amounts after adding order) the special order Revenue $9.000 Variable costs $1,000 Contribution margin 17,200 Fixed costs 51.400 Prot $5,800 Should you take the special order? Why? YES -- the prot is positive with the special order YES the profit is higher with the special order NO the low price for the special order reduces the contribution margin by use the incremental approach to decide whether you should take the special order. how much cach amount changes after adding the special order Incremental reven incrementalable costs incremental contribucionar Incrementale che Encremental probe The selling price is $20/unit, variable costs are $10/unit, and fixed costs are $3,000 in total. Sales volume decreased to 200 units because of a recession You are considering two options to stimulate sales: (1) Reduce the price to $18/unit. This will increase sales volume by 20% (2) Buy additional advertising for $300 and keep the original price. This will increase sales volume by 20%. Use the gross approach to decide whether you should do nothing the status quo), reduce the price, or increase advertising. status quo (1) reduce the price (2) increase advertising Volume in units Revenue Variable costs $ $ $ Contribution margin $ $ $ Fixed costs $ $ $ Profit $ $ $ enter losses as a negative number: e.o., a loss of $500 should be entered as -500, not as (500) or ($500) Enter a number $ What should you do? Do nothing Reduce the price Increase advertising You marrierator. Currently, you manufacture compressors for your operators in how An outside woleras offered to sell you equivalent compressors a whole of sus per unit You nood 1,000 compressorer month The internal production couts per compressores follows per un direct materia 320 direct labor 340 variable overhead 30 fixed overhead 510 total $90 If you outsource the production of compressors (the buy option) in the short term, how will this choice affect your costs and profit Fust, compute variable costs under MAKE versus BV MAKE BUY Just VC total v If you outsource (UY), the incremental revenue, costs, and profitare how much each amount changes if you outsource Incremental revenue Incremental Incremental CM incremental Incremental profit Enter negative amounts with a mission, L., 1.000 not ($1,000). Should you outsource? NO touring reduces prot by $5.000 YES outsourcing reduces by $5,000 You have three product lines Bas Premium und Supreme. You capacity of 300 machine hours. You can demand for all three products me limited and form) Basic Premium Supreme Price per unit 54,200 39,000 $14.000 Unt variable cool 51.400 2.000 4,200 Machine hours per unit 1 2 4 Compute the CM per unit of capacity (le, per machine-hour) for each product: Bases per hour Premium per hour Supremes per hour Which product() should you make? Premium only O altre products to take advantage of the high demand Basic Only Supreme only How many units of each product should you make Center for products that you do not want to make) Basic nis Premium Supreme units it if you get stuck You have 300 machine hours