Question

MSI has been approached by a fourm grade leacher o Potand about the possbty of creatng a specialy designed game at wod be cuomd or her asoom and enent The eaher w a edic of the Pactc Notwest and the stale of Onegon n pancua M has not soi es geoducts drec to eachers or school sy s the pest bd s dakng Depatrent ed tat possibty ding a cet eesing cassoocoverae of he natoy lasco ary of the maion relaed to The leacher han offered to buy 1.300 cops of the CD at a price of $5 00 each MSI couad eay modly one of s exng educalona proga production of MSrs curent htory program totows oy accmode the reguest The mocaos wod c about U ap ely 540 A Direct maeria Deed leb Vaiable anacng eveead Fixad mandaheng ovehead Solal cast per un Sales price per unit $121 44 205 190 Required 1.Compute the ncremental peot (or s)om accepting the special oder Prol (or Less

Answer 1

1
	Per unit	Total 1300 units
Incremental revenue	5.00	6500
Incremental costs:
Direct materials	1.21	1573
Direct labor	0.44	572
Variable manufacturing overhead	2.05	2665
Modifications cost		490
Total Incremental costs		5300
Incremental net operating income(loss)		1200
Profit(or loss) increases by $1200
2
Yes, accept the special order
3
	Per unit	Total 1300 units
Incremental revenue	4.50	5850
Incremental costs:
Direct materials	1.21	1573
Direct labor	0.44	572
Variable manufacturing overhead	2.05	2665
Modifications cost		490
Total Incremental costs		5300
Incremental net operating income(loss)		550
Profit(or loss) increases by $550
4
Special order price	12.38	=12+(490/1300)