SPECIAL ORDERS Each of the following 4 questions are independent of each other. [1] The Lantern Corporation has 1,000 obsolete lanterns that are can'ied in inventory at a manufacturing cost of $20,000. If the lanterns are remachined, they could be sold for $9,000. Alternatively, the lanterns could be sold for scrap for $1,000. Quantity of obsolete lanterns 1,000 Manufacturing cost of obsolete lanterns 5 20,000 Cost to remachine the obsolete lanterns S 5,340 RLLmachined lanterns could be sold for S 9,000 Obsolete lanterns, if not rLLmachined, could be sold for S 1,000 Reguired: Which alternative [scrap or rLLmachine] is more desirable, and what are the total relevant costs for that alternative? More desirable alternative Relevant costs of more desirable alternative [2] Relay Corporation manufactures batons. At full capacity, Relay can manufacture 300,000 batons a year at a variable cost of S?50,000 and a xed cost of $450,000. Based on Relay's predictions for next year, 240,000 batons will be sold at the regular price listed each, as indicated below. In addition, a special order was placed for 60,000 batons to be sold at a 40% specified discount off the regular price. Total xed costs would be unaffected by this order. Quantity of batons at full capacity 300,000 Total variable manufacturing cost of batons at full capacity S 750,000 Total xed manufacturing cost of batons at full capacity S 450,000 Quantity of batons to be sold at regular price next year 240,000 Regularselling price of batons S 5.70 Quantity of batons to be sold at special order price next year 50,000 Discount off the regular price for special order 40% Reguired: By what amount would the company's operating income be increased or (decreased) as a result of the special order? [3] The manufacturing capacity of Jordan Company's facilities is 30,000 units a year. A summary of operating results for last year follows: Manufacturing capacity in units 30,000 Sales units 18,000 Selling price per unit S 100.00 Sales 5 1.3001000 Variable Costs 990,000 Contribution Margin 810,000 Fixed Costs 495,000 Operating Income 5 315,000 A foreign distributor has offered to buy the following quantity of units at $90 per unit next year. Jordan expects its regular sales next year to be 18,000 units Quantity of units foreign distributor has offered to buy 13,850 Unit price foreign distributor has offered to pay 5 90.00 Reguired: If Jordan accepts this offer and rejects some business from regularcustomers so as not to exceed capacity, what would be the total operating income next year? (4) Wagner Company sells Product A for $41 per unit. Wagner's unit product cost based on the full capacity of 200,000 units is as follows: Selling price for Product A 5 41.00 Full capacity in units 200,000 Direct Materials 5 5.?0 Direct Labour 5.00 Manufacturing Overhead 6.00