Wilson Cullumber is a leading producer of vinyl replacement windows. The company's growth strategy focuses on developing domestic markets in large metropolitan areas. The company operates a single manufacturing plant in Kansas City with an annual capacity of 500,000 windows. Current production is budgeted at 450,000 windows per year, a quantity that has been constant over the past three years. Based on the budget, the accounting department has calculated the following unit costs for the windows:

Direct materials $40.00

Direct labor 18.00

Manufacturing overhead 16.00

Selling and administrative 14.00

Total unit cost $88.00

The company's budget includes $5,400,000 in fixed overhead and $3,150,000 in fixed selling and administrative expenses. The windows sell for $150.00 each. A 2% distributor's commission is included in the selling and administrative expenses.

(a1)

Calculate variable overhead per unit and variable selling and administrative costs per unit. (Round answers to 2 decimal places, e.g. 15.25.)

Variable overhead per unit $enter a dollar amount rounded to 2 decimal places_________________

Variable selling and administrative costs per unit $enter a dollar amount rounded to 2 decimal places________________

(a2)

Culver, Finland's second largest homebuilder, has approached Wilson with an offer to buy 75,000 windows during the coming year. Given the size of the order, Culver has requested a 40% volume discount on Wilson's normal selling price. The Contribution lost from regular sales 25,000 units Calculate the contribution from special order. (If net contribution is negative, enter amount with a negative sign, e.g. -5,285 or parentheses, e.g. (5,285). Round answer to 0 decimal places, e.g. 8,971.)

Net contribution from special order $enter the net contribution from special order in dollars rounded to 0 decimal places_______________

Should Wilson grant Culver 's request? Y/N _________

(c1)

Return to the original data. Monk Builders has just signed a contract with the state government to replace the windows in low-income housing units throughout the state. Monk needs 80,000 windows to complete the job and has offered to buy them from Wilson at a price of $110.00 per window. Monk will pick up the windows at Wilson's plant, so Wilson will not incur the $2 per window shipping charge. In addition, Wilson will not need to pay a distributor's commission, since the windows will not be sold through a distributor.

Calculate the contribution from special order, contribution lost from regular sales and the net contribution from special order.

Contribution from special order $enter a dollar amount_______________

Contribution lost from forgone regular sales $enter a dollar amount_____________________

Net contribution from special order $enter a dollar amount__________________

(c2)

Should Wilson accept Monk's offer?Y/N ________

(d1)

If Wilson decides to accept Monk's offer, it will need to find an additional 30,000 windows to meet both the special order and normal sales. Splish Brother Panes has offered to provide them to Wilson at a price of $130.00 per window. Splish Brother Panes will deliver the windows to Wilson, and Wilson would then distribute them to its customers.

Calculate total contribution from outsourcing.

Total contribution from outsourcing $enter the total contribution from outsourcing in dollars__________________

(d2)

Should Wilson outsource the production of the extra windows to Splish Brother Panes? Y/N ___________________