Ch. 4 Question 4 MSI has been approached by a teacher to creat a specialty designed game for her classroom. MSI has not sold its products to teahcers or schools directly. The teacher has offered to buy 1,000 copies at $5.00 each . MSI could easily modify one of it's existing programs. The modifications would cost $500. 1) Suppose MIS is operating at full capacity. To accept the special order, it would have to reduce production of a program. What is the special order price at which MSI would be indifferent between accepting or rejecting the special order Direct Materials $1.50 Direct Labor $.60 Variable Manufacturing OH $2.25 Fixed Manufacturing Overhead $2.00 Total Cost per unit $6.35 Sales Price per unit $12.00
Ch. 4 Question 4
MSI has been approached by a teacher to creat a specialty designed game for her classroom. MSI has not sold its products to teahcers or schools directly. The teacher has offered to buy 1,000 copies at $5.00 each . MSI could easily modify one of it's existing programs. The modifications would cost $500.
1) Suppose MIS is operating at full capacity. To accept the special order, it would have to reduce production of a program. What is the special order price at which MSI would be indifferent between accepting or rejecting the special order
Direct Materials $1.50
Direct Labor $.60
Variable Manufacturing OH $2.25
Fixed Manufacturing Overhead $2.00
Total Cost per unit $6.35
Sales Price per unit $12.00
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