Question: Please solve for as much as you can. Thanks! Below is the current income information for Radiance Inc. Sales (400,000 units) Direct Materials Direct Labor

 Please solve for as much as you can. Thanks! Below isthe current income information for Radiance Inc. Sales (400,000 units) Direct Materials

Please solve for as much as you can. Thanks!

Below is the current income information for Radiance Inc. Sales (400,000 units) Direct Materials Direct Labor Variable Overhead Total Per Unit 2,400,000 6.00 576,000 1.44 144,000 0.36 240.000 0.60 1.440,000 Contribution Margin. 3.60 Fixed Overhead 0.20 80,000 Fixed Selling and Admin 0.15 60,000 Net Income 1,300,000 A customer has approached Radiance and offers to buy 50,000 units for 3.80 each. These sales would not affect the company's sales through its normal channels and Radiance has sufficient capacity to take the order. Details about the offer are as follows: Accepting the offer would require additional selling and admin costs of $5,000. The order would require a special high quality material in the production process. Each unit would require 0.40 pounds of this material and the material is expected to cost $0.80 a pound Required: 1. Should the company accept or reject the special offer? Explain. Part II Assume now that Radiance does not have sufficient capacity to take the order. The customer still insists on completing the order and changes their offer to pay $5.00/unit for 50,000 units. The customer still wants the special additive material and the company will still incur the additional selling and admin costs of 5,000 to take the order. Your management team has proposed a couple independent solutions to address this capacity issue - please assess each independently and determine whether it makes sense for the company to take the order under the proposed changes. Proposed solution 1: One way to overcome the constraint would be to ask the labor force to work overtime. Currently, the average hourly pay for a factory line worker is $12 an hour. If we decided to take the order, we would need to pay our line workers an average of 18 an hour for those who are working on the order. Furthermore, we would need to pay line supervisors who are normally scheduled for 40 hours a week to come in to supervise - we would need to pay them an additional bonus of 6,000 to incentivize them to come in over the weekend. 2. If the above changes are made, should we take the special order (hint: you will need to determine the new direct labor cost per unit given the change in hourly rate - look carefully at the given information and use your intuition to figure this out). 3. Now assume that this special additive material is harder to work with and direct labor hours per unit to increase. Now, each unit is expected to take 6 minutes of time. Should we take the special order under this circumstance? Proposed solution 2: We could also purchase one of the components used in our manufacturing process and re- configure some of our existing capacity to help with the order. Currently, one component, chipset Alpha, is made in our factory and used in the final product. Each final unit produced requires two Alpha chips, and the variable cost of each chip is normally $0.08). The $0.08 cost of Alpha is normally included as direct materials for the final product. Furthermore, Radiance allocates 40,000 of its fixed overhead to the overall cost of Alpha, which is the equivalent of $0.05 per Alpha chip (based on current production). Another manufacturer has offered to sell us Alpha chips for $0.40 a chip. If we purchase Alpha chips from the other manufacturer, it will alleviate our capacity issue and allow us to take the 50,000 order from the new customer without any other cost increase. Note that Radiance would continue to make Alpha chips for its existing production - it would only purchase the Alpha chips for the special order. 4. If we decided to purchase chipset Alpha from the other manufacturer, should we take the special order? 5. Now assume that each unit we produce requires four Alpha chips. Should we take the special order given this change

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