Ch. 4 Question 4 Please solve and explain the problem below and answer the questions. "MSI has been approached by a fourth grade teacher from POrtland about the possiblity of creating a specially designed game that would be customized for her class room and envrionement. 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 product directly to teachers or school systems in the past, but its Marketing Department indentified that possiblity during a recent meeting. The teacher has offered to buy 1,000 copies of the CD at $5 each. MSI could easily modify one of its existing educational programs about US history to accommodate the request. The modifications would cost approximately $500. 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 1) Compute the incremental profit (or loss) from accepting the special order 2) Suppose the special order had been to purchase 1,000 copies of the program for $4.50 each. Compute the incremental profit (or loss) for this scenario
Ch. 4 Question 4
Please solve and explain the problem below and answer the questions.
"MSI has been approached by a fourth grade teacher from POrtland about the possiblity of creating a specially designed game that would be customized for her class room and envrionement. 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 product directly to teachers or school systems in the past, but its Marketing Department indentified that possiblity during a recent meeting.
The teacher has offered to buy 1,000 copies of the CD at $5 each. MSI could easily modify one of its existing educational programs about US history to accommodate the request. The modifications would cost approximately $500.
Direct Materials $1.50
Direct Labor $.60
Variable Manufacturing OH $2.25
Fixed Manufacturing
Total Cost Per Unit $6.35
Sales Price Per Unit $12.00
1) Compute the incremental profit (or loss) from accepting the special order
2) Suppose the special order had been to purchase 1,000 copies of the program for $4.50 each. Compute the incremental profit (or loss) for this scenario
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