w Required Information The following information applies to the questions displayed below] of 3 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 Northwest, 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 recent meeting. The teacher has offered to buy 1,400 copies of the CD at a price of $6.00 each. MSI could easily modity one of its existing educational programs about U.S. history to accommodate the request. The modifications would cost approximately $410. A summary of the Information related to production of MSI's current history program follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total cost per unit Sales price per unit $ 1.26 8.31 2.15 1.se $ 5.42 $12.88 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 1.400 copies of the program for $2.50 each. Compute the incremental profit for loss) from accepting the special order under this scenario 4. Suppose that Msus operating at full capacity. To accept the special order. It would have to reduce production of the history program. Compute the special order price ot which MSI would be indifferent between accepting or rejecting the special order Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Prek 1 2 3 Next > Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total cost per unit Sales price per unit $ 1.06 0.31 2.15 1.90 $ 5.42 $12.00 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 1.400 coples of the program for $2.50 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 to reduce production of the history program. Compute the special order price at which MSI would be indifferent between accepting or rejecting the special order. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Compute the incremental profit (or loss) from accepting the special order. Profit (or Loss) by Required 2 > Next > Prey 1 2 of 8 3 $12. 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 1,400 coples of the program for $2.50 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 to reduce production of the history program. Compute the special order price at which MSI would be indifferent between accepting or rejecting the special order. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Should MSI accept the special order? Should MSI accept the special order? Next > Sales price per unit $12.00 Required: . Compute the incremental profit (or loss) from accepting the special order. Should MSI accept the special order? . Suppose that the special order had been to purchase 1,400 coples of the program for $2.50 each. Compute the incremental profit or loss) from accepting the special order under this scenario. 1. Suppose that MSI is operating at full capacity. To accept the special order, It would have to reduce production of the history program. Compute the special order price at which MSI would be indifferent between accepting or rejecting the special order. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Regs 4 Suppose that the special order had been to purchase 1,400 copies of the program for $2.50 each. Compute the incremental profit (or loss) from accepting the special order under this scenario. Profit (or Loss) by FON 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 1,400 coples of the program for $2.50 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 to reduce production of the history program. Compute the special order price at which MSI would be indifferent between accepting or rejecting the special order. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Suppose that MSI is operating at full capacity. To accept the special order, it would have to reduce production of the history program. Compute the special order price at which MSI would be indifferent between accepting or rejecting the special order. (Round your answer to 2 decimal places.) Special Order Price young duus, 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 is considering outsourcing the production of the handheld control module used with some of its products. The company has received a bld from Monte Legend Co. (MLC) to produce 22,000 units of the module per year for $26.00 each. The following Information pertains to MSI's production of the control modules: $13 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total cost per unit 5 $31 MSI has determined that it could eliminate all variable costs if the control modules were produced externally, but none of the fixed overhead is avoidable. At this time, MSI 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? 3-8. Suppose that the MSI space currently used for the modules could be utilized by a new product line that would generate $40,000 In annual profit. Recompute the difference in cost between making and buying under this scenario. 3-b. Does this change your recommendation to MSI? Complete this question by entering your answers in the tabs below. Real Req 2 Reg 3A Reg 38 Compute the difference in cost between making and buying the control module. Difference in Cost Prev 2 3 of 8 Next > Total CORT per unit $31 MSI has determined that it could eliminate all variable costs If the control modules were produced externally, but none of the fixed overhead is avoidable. At this time, MSI 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? 3-2. Suppose that the MSI space currently used for the modules could be utilized by a new product line that would generate $40,000 in annual profit. Recompute the difference in cost between making and buying under this scenario. 3-b. Does this change your recommendation to MSI? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3A Req 3B Should MSI buy the modules from MLC or continue to make them? Should MSI buy the modules from MLC or continue to make them? Prey of 8 Ne midle dll Valldble costs the control modules were produced extemally, but none of the fixed overhead is avoidable. At this time, MSI 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 $40.000 7 annual profit. Recompute the difference in cost between making and buying under this scenarlo. E-b. Does this change your recommendation to MSI? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req Req 3B Does this change your recommendation to MSII Does this change your recommendation to MSI? Req 3A Prey 501 age and includes "ours" of a hypothetical town. Two products, The Pet Store Parade and The Grocery Getaway, have Impressive sales. However, sales for the third CD in the collection, The Post Office Polka, have lagged the others. Several other CDs are planned for this collection, but none is ready for production. 13 MSI's Information related to the ToddleTown Tours collection follows: Segmented Income Statement for MSI's ToddleTown Tours Product Lines Sales revenue Variable costs Contribution margin Less: Direct Fixed costs Segment margin Less: Common fixed costs Net operating income (loss) Pet Store Parade $115,000 49, eee $ 66, een 7,400 $ 58,600 5,75e $ 52,850 Grocery Getaway $110, eee 45, eee $ 65, eee 7, eee $ 58, eee 5,500 $ 52, see Post Office Polka Total $32, eee $257, eee 28,000 122,00 $ 4,eee $135,000 3,000 17,400 $ 1,800 $117,6ee 1,600 12,85e $ (600) $184,750 "Allocated 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 items. 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-a. Calculate the incremental effect on profit if the POP product is eliminated. Suppose that $1,200 of the common fixed costs could be avoided if the POP product line were eliminated. 3-b. Should MSI drop the POP product? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Reg 3A Reg 38 Calculate the incremental effect on profit if the POP product is eliminated. Effect on Profit Reg 2 > is considering eliminating a product from its ToddleTown Tours collection. This collection is aimed at children one to three years of age and includes "ours" of a hypothetical town. Two products, The Pet Store Parade and The Grocery Getaway, have impressive sales. However, sales for the third CD in the collection, The Post Office Polka, have lagged the others. Several other CDs are planned for this collection, but none is ready for production. 3 MSI's Information related to the ToddleTown Tours collection follows: Segmented Income Statement for MSI's ToddleTown Tours Product Lines Polka Sales revenue Variable costs Contribution margin Less: Direct Fixed costs Segment margin Less: Common fixed costs Net operating income (loss) Pet Store Parade $115, eee 49, eee $ 66,000 7,400 $ 58,600 5,750 $ 52,850 Grocery Getaway $110, eee 45,000 $ 65, eee 7, eee $ 58, eee 5, see $ 52,500 Post Office Total $32, eee $257, eee 28, eee 122,eee $ 4,000 $135, eee 3,000 17,400 $ 1,200 $117,600 1,600 12,850 $ (600) $184,750 *Allocated based on total sales revenue. es MSI has determined that elimination of the Post Office Polka (POP) program would not Impact sales of the other two items. 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-a. Calculate the incremental effect on profit if the POP product is eliminated. Suppose that $1,200 of the common fixed costs could be avoided if the POP product line were eliminated. 3-b. Should MSI drop the POP product? Complete this question by entering your answers in the tabs below. Reg 1 Reg zho Reg 3A Reg 3B Should MSI drop the POP product? Should MSI drop the POP product? Prey Next MSI is considering eliminating a product from Its ToddleTown Tours collection. This collection is almed at children one to three years of age and includes "tours" of a hypothetical town. Two products, The Pet Store Parade and The Grocery Getaway, have impressive sales. However, sales for the third CD in the collection, The Post Office Polka, have lagged the others. Several other CDs are planned for this collection, but none is ready for production MSI's Information related to the ToddleTown Tours collection follows: Segmented Income Statement for MSI'S ToddleTown Tours Product Lines Sales revenue Variable costs Contribution margin Less: Direct Fixed costs Segment margin Less: Common fixed costs Net operating income (loss) Pet Store Parade $115,000 49, eee $ 66,00 7, 4ee $ 58,600 5,75e $ 52,850 Grocery Getaway $110, eee 45, eee $ 65,000 7, eee $ 58,eee 5,500 $ 52,500 Post Office Polka Total $32, eee $257. eee 28,eee 122,eee $ 4, eee $135, eee 3, eee 17,400 $ 1,eee $117,600 1,600 12,850 $ (600) $184,750 "Allocated 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 items. 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-a. Calculate the incremental effect on profit if the POP product is eliminated. Suppose that $1.200 of the common fixed costs could be avoided if the POP product line were eliminated. 3-b. Should MSI drop the POP product? Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Reg 3A Reg 38 Calculate the incremental effect on profit if the POP product is eliminated. Suppose that $1,200 of the common fixed costs could be avoided if the POP product line were eliminated. Effect on Profit Prey af 8 Next > 1999 pianiniec 3 for this collection, but none is ready for production. MSI's Information related to the ToddleTown Tours collection follows: Segmented Income Statement for MSI'S ToddleTown Tours Product Lines Sales revenue Variable costs Contribution margin Less: Direct Fixed costs Segment margin Less: Common fixed costs Net operating income (loss) Pet Store Parade $115,000 49,00 $ 66, eee 7,400 $ 58,600 5,750 $ 52,850 Grocery Getaway $110, eee 45, eee $ 65, eee 7,000 $ 58, eee 5,500 $ 52,500 Post Office Polka $32, eee 28,000 $ 4,000 3,000 $ 1,eee 1,6ee $ (600) Total $257, eee 122,eee $135, eee 17,400 $117,600 12,850 $184,750 *Allocated 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 items. 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.a. Calculate the incremental effect on profit if the POP product is eliminated. Suppose that $1,200 of the common fixed costs could be avoided if the POP product line were eliminated. 3-b. Should MSI drop the POP product? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Rea 3A Reha 38 Should MSI drop the POP product? Should MSI drop the POP product?