Show all your work including assumptions, statements, arguments, etc.

$(30$ points$)$ ABC Electronics manufactures Blue$-$Ray drive, which has a fixed manufacturing

overhead budget for year $20x3$ of $$2,000,000.$ The sales of Blue$-$Ray drive are expected to be

$500,000$ units for the year. All variable manufacturing costs are expected to be $$8$ per unit.

The company has budgeted $$5,000,000$ for selling and administrative expenses and of which,

$40\%$ of them are variable expenses. The sale price of the Blue$-$Ray drive will be $$30$ each.

$(1)$ Prepare a budgeted income statement for the year in contribution form ignoring income

taxes.

$(2)$ If a computer manufacturer offers to buy $200,000$ units of Blue$-$Ray drive for $$2$ million

on a one$-$time special order. Assume that ABC Electronics has enough manufacturing

capacity for the order and there will be no selling and administrative cost incurred.

However, a special commission of $5\%$ of the sales of this special order will apply. Should

the company take this special order?

$(3)$ For the special order in $(2),$ if ABC Electronics only has extra capacity of $100,000$ units

and the additional $100,000$ units need to be subcontracted for $$15$ each, should the

company take this special order?

$(4)$ For the special order in $(3),$ what is the highest subcontract price that the company can

accept so that the company will not lose money on this special order?