Question 1 Sofia Company manufactures a variety of electrical switches. The company is currently manufacturing all...

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Question 1 Sofia Company manufactures a variety of electrical switches. The company is currently manufacturing all of its own components parts. An outsider supplier has offered to sell a switch to Sofia for $32 per unit. To evaluate this offer, Sofia has gathered the following information relating to its own cost of producing the switch internally: Direct materials Direct labour Variable manufacturing overhead fixed manufacturing overhead, traceble fixed manufacturing overhead, common, but Total cost 12,000 Units Per Unit per Year $ 12 $ 144,000 10 120,000 3 36,000 8* 96,000 16 192,000 $ 41 $ 588,000 *25% supervisory salaries, 75% depreciation of special equipment(no resale value) Required: 1). Assuming the company has no alternative use for the facilities now being used to produce the switch, should the outside supplier's offer be accepted? Show all computations. 2). Suppose that if the switches were purchased, the company could use the free capacity to launch a new. The segment margin of the new product would be $78,000 per year. Should Sofia company accept the offer to buy the switches from the outside supplier for $32 each? Question 2 Hart Awards has had a request for a special order of 10 silver-plated trophies from the provincial tennis-association. The normal selling price of such as trophy is $249.95 and its unit product cost is $164.00, as shown below: Direct materials Direct labour Manufacturing overhead Total cost Per Unit $ 93.00 56.00 15.00 $164.00 Most of the manufacturing overhead is fixed and unaffected by variations in how many trophies are produced in in any given period. However, $7 of the overhead is variable, depending on the number of trophies produced. The customer would like a special logo applied to the trophies requiring additional materials costing $6 per trophy and would also require acquisition of a special tool costing $195 that would have no other use once the special order is completed. This order would have no effect on the company's regular sales, and the order could be filled using the company's existing capacity without affecting any order. Required: What effect would accepting this order have on the company's operating income if a special price of $199.95 is offered per trophy for this order? Should the special order be accepted at this price? Question 1 Sofia Company manufactures a variety of electrical switches. The company is currently manufacturing all of its own components parts. An outsider supplier has offered to sell a switch to Sofia for $32 per unit. To evaluate this offer, Sofia has gathered the following information relating to its own cost of producing the switch internally: Direct materials Direct labour Variable manufacturing overhead fixed manufacturing overhead, traceble fixed manufacturing overhead, common, but Total cost 12,000 Units Per Unit per Year $ 12 $ 144,000 10 120,000 3 36,000 8* 96,000 16 192,000 $ 41 $ 588,000 *25% supervisory salaries, 75% depreciation of special equipment(no resale value) Required: 1). Assuming the company has no alternative use for the facilities now being used to produce the switch, should the outside supplier's offer be accepted? Show all computations. 2). Suppose that if the switches were purchased, the company could use the free capacity to launch a new. The segment margin of the new product would be $78,000 per year. Should Sofia company accept the offer to buy the switches from the outside supplier for $32 each? Question 2 Hart Awards has had a request for a special order of 10 silver-plated trophies from the provincial tennis-association. The normal selling price of such as trophy is $249.95 and its unit product cost is $164.00, as shown below: Direct materials Direct labour Manufacturing overhead Total cost Per Unit $ 93.00 56.00 15.00 $164.00 Most of the manufacturing overhead is fixed and unaffected by variations in how many trophies are produced in in any given period. However, $7 of the overhead is variable, depending on the number of trophies produced. The customer would like a special logo applied to the trophies requiring additional materials costing $6 per trophy and would also require acquisition of a special tool costing $195 that would have no other use once the special order is completed. This order would have no effect on the company's regular sales, and the order could be filled using the company's existing capacity without affecting any order. Required: What effect would accepting this order have on the company's operating income if a special price of $199.95 is offered per trophy for this order? Should the special order be accepted at this price?