Q4:9

Required A1

Required A2

Required B

Required C

Required D

Required E1

Required E2

Required F1

Required F2

Medbury Communications Systems (MCS) produces mobile radios for arctic and other harsh environments. The costs to manufacture and market the radios at the company's normal quarterly volume of 13,080 units are shown in the following fable: Recuired: Assume that no connection exists among the situations described in each question below unless otherwise stated. Each is independent. Also assume a regular selling price of $600 per unit unless otherwise stated. Ignore income taxes and other costs that are not mentioned in the accompanying table or in the question itself. a. Market research estimates that quarterly volume could be increased to 15,260 units, which is well within production capacity limitations if the price were cut from $600 to $525 per unit. Assuming that the cost behavior patterns implied by the data in the table are correct. a-1. What would be the impact on quarterly sales, costs, and income? a-2. Would you recommend taking this action? b. On Aprill, the federal government offers MCS a contract to supply 2,180 radios to military bases for a June 30 delivery. Because of an unusually iarge number of rush orders from its regular customers, MCS plans to produce 17,440 units during the second quarter, which for MCS runs from April 1 through June 30 . This level of production will use all available capacity for the quarter. If it accepts the government ordec, MCS would lose 2,180 units normally sold to regular customers to a competitor. The government contract would reimburse its "share of quarterly manufacturing costs" plus pay a $72,000 fixed fee (profit). (No variable marketing costs would be. incurred on the government's units.) What impact would accepting the government contract have on second quarter income? (Hint: Part of the question is to figure out the meaning of "share of quarterty manufacturing costs." c. MCS has an oboortunitv to enter a hiahlv combetitive foreian market. An attraction of the foreian market is that its demand is b. On April 1, the federal government offers MCS a contract to supply 2,180 radios to military bases for a June 30 delivery, Because of an unusually large number of rush orders from its regular customers, MCS plans to produce 17,440 units during the second quarter, which for MCS runs from April 1 through June 30 . This level of production will use all available capacity for the quarter. If it accepts the government order, MCS would lose 2,180 units normally sold to regular customers to a competitor. The government contract would reimburse its "share of quarterly manufacturing costs" plus pay a $72,000 fixed fee (profit). (No variable marketing costs would be incurred on the government's units.) What impact would accepting the government contract have on second quarter income? (Hint: Part of the question is to figure out the meaning of "share of quarterly manufacturing costs." c. MCS has an opportunity to enter a highly competitive foreign market. An attraction of the foreign market is that its demand is greatest when the domestic market's demand is quite low; thus, idle production facilities could be used without affecting domestic business. An order for 4,000 radios is being sought at a below-normal price to enter this market. For this order, shipping costs will total $73 per unit, total (marketing) costs to obtain the contract will be $6,400. No other variable marketing costs would be required on this order, and it would not affect domestic business. What is the minimum unit price that MCS should consider for this order of 4,000 radios? d. An inventory of 500 units of an obsolete model of the radio remains in the stockroom. These must be sold through regular channeis (thus incurring variable marketing costs) at reduced prices or the inventory will soon be valueless. What is the minimum acceptable selling price for these units? e-1. A proposal is received from an outside contractor who will make and ship 4,000 radios per quarter directly to MCS's customers as orders are recelved from MCS's sales representatives. The fixed marketing cost at MCS would be unaffected, but its variable marketing costs would be cut by 10 percent for these 4,000 units produced by the contractor. MCS's plant would operate at two-thirds of its normal level, and total fixed manufacturing costs would be cut by 15 percent. What in-house unit cost should be used to compare with the quotation recelved from the supplier? Assume the payment to the outside contractor is $399. e-2. Should the proposal be accepted for a price (that is, payment to the outside contractor) of $399 per unit? f-1. A proposal is recelved from an outside contractor who will make and ship 4,000 radios per quarter directly to MCS's customers as orders are received from MCS's sales representatives. The fixed markeng cost at MCS would be unalfected, but its variable marketing costs would be cut by 10 percent for these 4,000 units produced by the contractor. The idle facilities would be used to produce 3,200 modified radios per month for use in high-security operations. These modified radios could be sold for $729 each. while the costs of production would be $449 per unit variable manufacturing expense. Variable marketing costs would be $89 per unit. Fixed marketing and manufacturing costs would be unchanged whether the original 13,080 regular radios were manufactured or the mix of 9,080 regular radios plus 3,200 modified radios were produced. What in-house unit cost should be used to compare with the quotation recelved from the outside contractor? Assume the payment to the outside contractor is $399. 1.2. Should MCS accept the proposal from the outside contractor at a price of $399 per unit? mix of 9,080 regular radios plus 3,200 modified radios were produced. What in-house unit cost should be used to compare quotation recelved from the outside contractor? Assume the payment to the outside contractor is $399. f-2. Should MCS accept the proposal from the outside contractor at a price of $399 per unit? Complete this question by entering your answers in the tabs below. Market research estimates that quarterly volume could be increased to 15,260 units, which is well within production capacity limitations if the price were cut from $600 to $525 per unit. Assuming that the cost behavior patterns implied by the data in the table are correct. A1. What would be the impact on quarterly sales, costs, and income? (Select option "increase" or "decrease", keeping before price reduction as the base. Select "none" if there is no effect.) mix of 9,080 regular radios plus 3,200 modified radios were produced. What in-house unit cost should be used to compare with the quotation recelved from the outside contractor? Assume the payment to the outside contractor is $399. f-2. Should MCS accept the proposal from the outside contractor at a price of $399 per unit? Complete this question by entering your answers in the tabs below. Market research estimates that quarterly volume could be increased to 15,260 units, which is well within production capacity limitations if the price were cut from $600 to $525 per unit. Assuming that the cost behavior patterns implied by the data in the tabie are correct. A2. Would you recommend taking this action? Show less A quotation recelved from the outside contractor? Assume the payment to the outside contractor is $399. f-2. Should MCS accept the proposal from the outside contractor at a price of $399 per unit? Complete this question by entering your answers in the tabs below. On April 1, the federal government offers MCS a contract to supply 2,180 radios to military bases for a June 30 delivery, Because of an unusually large number of rush orders from its regular customers, MCS plans to produce 17,440 units during the second quarter, which for MCS runs from April 1 through June 30 . This level of production will use all avaliable capacity for the quarter. If it accepts the government order, MCS would lose 2, 180 units normally sold to regular customers to a competitor. The government contract would reimburse its "share of quarterly manufacturing costs" plus pay a $72,000 fixed fee (profit). (No variable marketing costs would be incurred on the government's units.) What impact would accepting the government contract have on second quarter income? (Hint: Part of the question is to figure out the meaning of "share of quarterly manufacturing costs.") (Select option "increase" or "decrease", keeping without government contract as the base. Select "none" if there is no effect.) produce 3,200 modified radios per month for use in high-security operations. These modified radios could be sold for $729 each, while the costs of production would be $449 per unit variable manufacturing expense. Variable marketing costs would be $89 per unit. Fixed marketing and manufacturing costs would be unchanged whether the original 13,080 regular radios were manufactured or the mix of 9,080 regular radios plus 3,200 modified radios were produced. What in-house unit cost should be used to compare with the quotation recelved from the outside contractor? Assume the payment to the outside contractor is $399. f.2. Should MCS accept the proposal from the outside contractor at a price of $399 per unit? Complete this question by entering your answers in the tabs below. MCS has an opportunity to enter a highly competitive foreign market. An attraction of the foreign market is thiat its demand is greatest when the domestic market's demand is quite low; thus, idle production facilities could be used without affecting domestic business. An order for 4,000 radios is being sought at a below-normal price to enter this market. For this order, shipping costs will total $73 per unit; total (marketing) costs to obtain the contract will be $6,400. No other variable marketing costs would be required on this order, and it would not affect domestic business. What is the minimum unit price that MCS should consider for this order of 4,000 radios? (Round your answer to 2 decimal places.) Complete this question by entering your answers in the tabs below. An inventory of 500 units of an obsolete model of the radio remains in the stockroom. These must be sold through regular channels (thus incurring variable marketing costs) at reduced prices or the inventory will soon be valueless. What is the minimum acceptable selling price for these units? 1-1. A proposal is received from an outside contractor who will make and ship 4,000 tadios per quarter directly to MCS's customers as orders are received from MCS's sales representatives. The fixed marketing cost at MCS would be unaffected, but its variable marketing costs would be cut by 10 percent for these 4,000 units produced by the contractor. The idle facilities would be used to produce 3,200 modified radios per month for use in high-security operations. These modified radios could be sold for $729 each, while the costs of production would be $449 per unit variable manufacturing expense. Variable marketing costs would be $89 per unit. Fixed marketing and manufacturing costs would be unchanged whether the original 13,080 regular radios were manufactured or the mix of 9,080 regular radios plus 3,200 modified radios were produced. What in-house unit cost should be used to compare with the quotation received from the outside contractor? Assume the payment to the outside contractor is $399. f-2. Should MCS accept the proposal from the outside contractor at a price of $399 per unit? Complete this question by entering your answers in the tabs below. A proposal is recelved from an outside contractor who will make and ship 4,000 radios per quarter directly to MCS's customers as orders are received from MCS's sales representatives. The fixed marketing cost at MCS would be unaffected, but its variable marketing costs would be cut by 10 percent for these 4,000 units produced by the contractor. MCS's plant would operate at two-thirds of its normal level, and total fixed manufacturing costs would be cut by 15 percent. What in-house unit cost should be used to compare with the quotation received from the supplier? Assume the payment to the outside contractor is $399. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Complete this question by entering your answers in the tabs below. Should the proposal be accepted for a price (that is, payment to the outside contractor) of $399 per unit? Should the propesal be accoptnd for a price (that is, payment to the outside centractent of $399 per unit? Complete this question by entering your answers in the tabs below. A proposal is received from an outside contractor who will make and ship 4,000 radios per quarter directly to MCS's customers as orders are recelved from MCS's sales representatives. The fixed marketing cost at MCS would be unaffected, but its variable marketing costs would be cut by 10 percent for these 4,000 units produced by the contractor. The idle facilities would be used to produce 3,200 modified radios per month for use in high-security operations. These modified radios could be sold for $729 each, while the costs of production would be $449 per unit variable manufacturing expense. Variable marketing costs would be $89 per unit. Fixed marketing and manufacturing costs would be unchanged whether the original 13,080 regular radios were manufactured or the mix of 9,080 regular radios plus 3,200 modified radios were produced. What in-house unit. cost should be used to compare with the quotation received from the outside contractor? Assume the payment to the outside contractor is $399. (Do not round intermedlate calculations. Round your final answer to 2 decimal places.) Complete this question by entering your answers in the tabs below. Should MCS accept the proposal from the outside contractor at a price of $399 per unit? Should MCS acougt the proposal from the outside contractor at a price of $399 per unit