Moscot manufactures high-end sunglasses that it sells in retail shops and online for $310, on average....

 

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Moscot manufactures high-end sunglasses that it sells in retail shops and online for $310, on average. Assume the following represent manufacturing and other costs. Variable Costs per Unit Fixed Costs per Month Direct materials.... Direct labor.. Factory overhead $ 80 Factory overhead..... 50 Selling and administrative. 35 Total $450,000 375,000 $825,000 Distribution . 10 Total ... $175 The variable distribution costs are for transportation to retail partners. Assume the current monthly production and sales volume is 15,000 units. Monthly capacity is 20,000 units. Determine the effect of each of the following independent situations on monthly profits. d. A Swiss distributor has proposed to place a special, one-time order for 6,000 units at a special price of $250 per unit. The distributor would pay all transportation costs. There would be additional fixed selling and administrative costs of $1,000. Assume overtime production is not possible. e. Assume Moscat provides a designer case for each pair of sunglasses that it manufactures. A Chinese manufacturer has offered a one-year contract to supply the cases at a cost of $10 per unit. If Moscat accepts the offer, it will be able to reduce variable manufacturing costs by 5%, reduce fixed costs by $5.000, and rent out some freed-up space for $4,000 per month, f. The glasses also come with a choice of lens tint. Assume that eliminating that option would reduce variable costs by $5 and eliminate $50,000 in fixed factory overhead. The selling price would likely have to decrease to $290 per unit. Moscot manufactures high-end sunglasses that it sells in retail shops and online for $310, on average. Assume the following represent manufacturing and other costs. Variable Costs per Unit Fixed Costs per Month Direct materials.... Direct labor.. Factory overhead $ 80 Factory overhead..... 50 Selling and administrative. 35 Total $450,000 375,000 $825,000 Distribution . 10 Total ... $175 The variable distribution costs are for transportation to retail partners. Assume the current monthly production and sales volume is 15,000 units. Monthly capacity is 20,000 units. Determine the effect of each of the following independent situations on monthly profits. d. A Swiss distributor has proposed to place a special, one-time order for 6,000 units at a special price of $250 per unit. The distributor would pay all transportation costs. There would be additional fixed selling and administrative costs of $1,000. Assume overtime production is not possible. e. Assume Moscat provides a designer case for each pair of sunglasses that it manufactures. A Chinese manufacturer has offered a one-year contract to supply the cases at a cost of $10 per unit. If Moscat accepts the offer, it will be able to reduce variable manufacturing costs by 5%, reduce fixed costs by $5.000, and rent out some freed-up space for $4,000 per month, f. The glasses also come with a choice of lens tint. Assume that eliminating that option would reduce variable costs by $5 and eliminate $50,000 in fixed factory overhead. The selling price would likely have to decrease to $290 per unit.

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d Since the total capacity for production is 20000 units and if the order for 6000 units will be acc... View the full answer