Ropple Components manufactures low-cost navigation systems for installation in ride-sharing cars. It sells these systems to various car services that can customize them for their locale and business model. It manufactures two systems, the Star100 and the Star150, which differ in terms of capabilities. The following information is available.

Costs per Unit	Star100	Star150
Direct materials	$69	$70
Direct labor	40	50
Variable overhead	20	25
Fixed overhead	94	124
Total cost per unit	223	278
Price	$300	$400
Units sold	4,000	2,000

Required:

a. A nationwide car-sharing service has offered to buy 2,600 Star100 systems and 2,600 Star150 systems if the price is lowered to $210 and $260, respectively, per unit.

a-1. If Ropple accepts the offer, how many direct labor-hours will be required to produce the additional systems?

A nationwide car-sharing service has offered to buy 2,600 Star100 systems and 2,600 Star150 systems if the price is lowered to $210 and $260, respectively, per unit.

A1. If Ropple accepts the offer, how many direct labor-hours will be required to produce the additional systems?

a-2. Complete the following table to determine the differential profit increase (or decrease) if Ropple accepts this proposal. Prices on regular sales will remain the same.

A nationwide car-sharing service has offered to buy 2,600 Star100 systems and 2,600 Star150 systems if the price is lowered to $210 and $260, respectively, per unit.

A2. Complete the following table to determine the differential profit increase (or decrease) if Ropple accepts this proposal. Prices on regular sales will remain the same.

Differential revenues:
Star100
Star150
Differential costs:
Star100
Star150
Differential profit (loss)

b-1. Suppose that the car-sharing has offered instead to buy 3,600 each of the two models at $210 and $260, respectively. This customer will purchase the 3,600 units of each model only in an all-or-nothing deal. That is, Ropple must provide all 3,600 units of each model or none. Ropple's management has decided to fill the entire special order for both models. In view of its capacity constraints, Ropple will reduce sales to regular customers as needed to fill the special order. Complete the table below to determine the total contribution margin with the special order added.

	Star100	Star150	Total
Special Order:
Contribution margin per unit
Number of units
Total contribution margin
Regular production:
Contribution margin per unit
Number of units
Total contribution margin
Total contribution margin for both:

b-2. How much will the profits change if the order is accepted? Assume that the company cannot increase its production capacity to meet the extra demand.

c-1. Assume that, in the situation presented in requirement b-1, the plant can work overtime. Direct labor costs for the overtime production increased to $37.50 per hour. Variable overhead costs for overtime production are $6 per hour more than for normal production. Complete the table below to determine the total contribution margin.

	Star100	Star150	Total
Special Order:
Contribution margin per unit
Number of units
Total contribution margin
Regular production:
Contribution margin per unit
Number of units
Total contribution margin
Total contribution margin for both:
Additional direct-labor costs
Additional variable overhead
Total contribution margin for both (with additional costs)

c-2. How much will the profits change in this situation?