[The following information applies to the questions displayed below] Morning Sky, Inc. (MSI), manufactures and sells computer games. The company has several product lines based on the age range of the target market. MSI sells both individual games as well as packaged sets. All games are in CD format, and some utilize accessories such as steering wheels, electronic tablets, and hand controls. To date, MSI has developed and manufactured all the CDs itself as well as the accessories and packaging for all of its products. The gaming market has traditionally been targeted at teenagers and young adults, however, the increasing affordability of computers and the incorporation of computer activities into junior high and elementary school curriculums has led to a significant increase in sales to younger children. MSI has always included games for younger children but now wants to expand its business to capitalize on changes in the industry. The company currently has excess capacity and is investigating several possible ways to improve profitability. MSI has been approached by a fourth-grade teacher from Portland about the possibility of creating a specially designed game that would be customized for her classroom and environment. The teacher would like an educational game to correspond to her classroom coverage of the history of the Pacific Nortiwest, and the state of Oregon in particular. MSI has not sold its products directly to teachers. or school systems in the past, but its Marketing Department identified that possibility during a fecent meeting The teacher has offered to buy 1,000 copies of the CD at a price of $5 each. MSi could easily modify one of tis existing educational programs about U.S. history to accommodate the request. The modifications would cost approvimately $500. A summary of the information related to production of MSI's current history program follows: Required: 1. Compute the incremental profit (or loss) from accepting the special order. 2. Should MSI accept the special order? 3. Suppose that the special order had been to purchase 1,000 copies of the program for $4.50 each. Compute the incremental profit (or loss) from accepting the special order under this scenario 4. Suppose that MSI is operating at full capacity. To accept the special order, it would have fo reduce production of the history program Compute the special order price at which MSI would be indifferent between accepting of rejecting the special order. ISI is considering outsourcing the production of the handheld control module used with some of its products. The company has eceived a bid from Monte Legend Co. (MLC) to produce 10,000 units of the module per year for $16 each. The following information ertains to MSI's production of the control modules: MSi has determined that it could eliminate all variable costs if the control modules were produced extennally, but none of the fixed bverhead is avoldable. At this time, MSt has no specific use in mind for the space that is currently dedicated to the control module production Required: 1. Compute the difference in cost between making and buying the control module. 2. Should MSI buy the modules from MLC or continue to make them? 3-a. Suppose that the MSI space currently used for the modules could be utilized by a new product line that would generate $35,000 In annual profit. Recompute the difference in cost between making and buying under this scenario 3-b. Does this change your recommendation to MSi? Anocated based on total sales revenue. MSI has determined that elimination of the Post Office Polka (POP) program would not impact sales of the other two itemis. The remaining fixed overhead currently allocated to the POP product would be redistributed to the remaining two products: Required: 1. Calculate the incremental effect on profit if the POP product is eliminated 2. Should MSI drop the POP product? 3.6. Calculate the incremental effect on profit if the POP product is eliminated. Suppose that $3,700 of the common fixed costs cour be avoided if the POP product line were eliminated 3-b. Should MSI drop the POP product? MSl's educational products are currently sold without any supplemental materials. The company is considering the inclusion of instructional materials such as an overhead slide presentation, potential test questions, and classroom bulletin board materials for teachers. A summary of the expected costs and revenues for MSI's two options follows: Required: 1. Based on the given data, compute the increase or decrease in profit that would result if instructional materials were added to the CDs 2. Should MSI add the instructional materials or sell the CDs without them? 3-0. Suppose that the higher price of the CDs with instructional materials is expected to reduce demand to 32,000 units. Complete the table given below based on Requirement 1 and 2 data. 3-b. Should MSI add the instructional materials or sell the CDs without them