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What is the minimum quantity of DVD players in the special order that would make it profitable




Exercise 4-37 Special Order (LO 4-1, 2);Mission Electronics manufactures and sells basic DVD players for sale under various generic store brand names. The cost of one of their models follows;Materials $ 19.60;Labor 13.60;Variable overhead 6.60;Fixed overhead ($3,541,600 per year, 466,000 units per year) 7.60;Total $ 47.40;Pacific Cash & Carry, a chain of low-price electronic sales and rental outlets, has asked Mission to supply them with 35,000 players for a special promotion Pacific is planning. Pacific has offered to pay Mission a unit price of $52 per DVD player. The regular selling price is $76. The special order would require some modification to the basic model. These modifications would add $5.60 per unit in material cost, $3.10 per unit in labor cost, and $2.10 in variable overhead cost. Although Mission has the capacity to produce the 35,000 units without affecting its regular production of 466,000 units, a one-time rental of special testing equipment to meet Pacific?s requirements would be needed. The equipment rental would be $56,000 and would allow Mission to test up to 66,000 units.;Required;a.;Prepare a schedule to show the impact of filling the Pacific order on Mission?s profits for the year.(Enter your answers in thousands of dollars. Round your answers to 1 decimal place.);b. From an operating profit perspective for the current year, should Mission accept the order?;No;yes;c. What is the minimum quantity of DVD players in the special order that would make it profitable?


Paper#25119 | Written in 18-Jul-2015

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