thousand islands company produces a variety of electric scooters

Project Description:

thousand islands company produces a variety of electric scooters. management follows a pricing policyˇ of manufacturing cost plus 60 percent. in response to a request from northern cycles, llc, the followingˇ price has been developed for an order of 300 scooters (the smallest scooter thousand islands produces):manufacturing costs direct materials ………………………….. $10,000 direct labor ………………………………. 12,000 factory overhead ………………………… 18,000total ……………………………………… 40,000 markup (60%) ……………………………. 24,000 selling price ………………………………. $64,000mr. bass, the president of northern cycles, rejected this price and offered to purchase the 300 scooters at a price of $44,000. the following additional information is available:thousand islands has sufficient excess capacity to produce the scooters. factory overhead is applied on the basis of direct labor dollars.budgeted factory overhead is $400,000 for the current year. of this amount, $100,000 is fixed. of the $18,000 of factory overhead assigned to the northern cycles, only $13,500 is driven by the special order; $4,500 is a fixed cost. selling and administrative expenses are budgeted as follows:fixed ………………………….. $90.000 per year variable ……………………….. $20 per unit manufactured and soldrequireda. the president of thousand islands wants to know if he should allow mr. bass to have the scooters for $44,000. determine the effect on profits of accepting mr. bass's offer.b. briefly explain why certain costs should be omitted from the analysis in requirement (a).c. assume thousand islands is operating at capacity and could sell the 300 scooters at its regular markup.1. determine the opportunity cost of accepting mr. bass's offer.2. determine the effect on profits of accepting mr. bass's offer.d. what other factors should thousand islands consider before deciding to accept the special order?
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Price Type: Negotiable

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