Problem $4-51($Algo$)$ Special Orders $($LO $4-1,2)$

Miles Audio produces and sells car audio systems. They specialize in receivers and currently offer

two models. The Growler is a high quality but affordable unit that the company produces for sale in

auto parts and electronics stores. The Maniac is sold almost solely to individuals and high$-$end car

stereo installers. The Maniac is only produced to order. In other words, the Maniac is not kept in

inventory and is only produced when a customer orders one. Based on estimates of next quarter's

business, the financial staff at Miles has produces the following forecasted income statement.

Firm orders have already been placed with Miles for the $450$ Maniac systems reflected in the

forecasted quarterly income statement. Materials inspection varies with material cost. The labor

wage rate at Miles $($excluding variable overhead$)$ is $$32$ per hour. The factory lease, utilities, and

miscellaneous factory costs are allocated to the product lines based on the amount of floor space

occupied. Sales and administration costs are not allocated to the two product lines.