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MSI's educational products currently are sold without any supplemental materials. The company is considering the inclusion of instructional materials such as an overhead slide presentation, potential test questions, and classroom bulletin board materials for teachers. A summary of the expected costs and revenues for MSI's two options follows: CD with Instructional Estimated demand Estimated sales price Estimated cost per unit Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit manufacturing cost Additional development cost Required: CD Only 27,000 units $ 23.00 Materials 27,000 units $ 38.00 $ 2.75 $ 3.25 4.00 7.00 4.00 7.25 3.50 3.50 $ 14.25 $ 21.00 $ 105,000 1. Based on the given data, compute the increase or decrease in profit that would result if instructional materials were added to the CDs. 2. Should MSI add the instructional materials or sell the CDs without them? 3-a. Suppose that the higher price of the CDs with instructional materials is expected to reduce demand to 20,000 units. Complete the table given below based on this scenario. 3-b. Should MSI add the instructional materials or sell the CDs without them? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A Req 3B Based on the given data, compute the increase or decrease in profit that would result if instructional materials were added to the CDs. Sales Revenue Variable Costs Contribution Margin Additional Development Costs Differential Profit (Loss) CD Only CD with Instructional Materials Incremental

MSI's educational products currently are sold without any supplemental materials. The company is considering the inclusion of instructional materials such as an overhead slide presentation, potential test questions, and classroom bulletin board materials for teachers. A summary of the expected costs and revenues for MSI's two options follows: CD with Instructional Estimated demand Estimated sales price Estimated cost per unit Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit manufacturing cost Additional development cost Required: CD Only 27,000 units $ 23.00 Materials 27,000 units $ 38.00 $ 2.75 $ 3.25 4.00 7.00 4.00 7.25 3.50 3.50 $ 14.25 $ 21.00 $ 105,000 1. Based on the given data, compute the increase or decrease in profit that would result if instructional materials were added to the CDs. 2. Should MSI add the instructional materials or sell the CDs without them? 3-a. Suppose that the higher price of the CDs with instructional materials is expected to reduce demand to 20,000 units. Complete the table given below based on this scenario. 3-b. Should MSI add the instructional materials or sell the CDs without them? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A Req 3B Based on the given data, compute the increase or decrease in profit that would result if instructional materials were added to the CDs. Sales Revenue Variable Costs Contribution Margin Additional Development Costs Differential Profit (Loss) CD Only CD with Instructional Materials Incremental

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter13: The Balanced Scorecard: Strategic-based Control
Section: Chapter Questions
Problem 25P: Auflegger, Inc., manufactures a product that experiences the following activities (and times):...
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MSI's educational products currently are sold without any supplemental materials. The company is considering the inclusion of instructional materials such as an overhead slide presentation, potential test questions, and classroom bulletin board materials for teachers. A summary of the expected costs and revenues for MSI's two options follows: CD with Instructional Estimated demand Estimated sales price Estimated cost per unit Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit manufacturing cost Additional development cost Required: CD Only 27,000 units $ 23.00 Materials 27,000 units $ 38.00 $ 2.75 $ 3.25 4.00 7.00 4.00 7.25 3.50 3.50 $ 14.25 $ 21.00 $ 105,000 1. Based on the given data, compute the increase or decrease in profit that would result if instructional materials were added to the CDs. 2. Should MSI add the instructional materials or sell the CDs without them? 3-a. Suppose that the higher price of the CDs with instructional materials is expected to reduce demand to 20,000 units. Complete the table given below based on this scenario. 3-b. Should MSI add the instructional materials or sell the CDs without them? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A Req 3B Based on the given data, compute the increase or decrease in profit that would result if instructional materials were added to the CDs. Sales Revenue Variable Costs Contribution Margin Additional Development Costs Differential Profit (Loss) CD Only CD with Instructional Materials Incremental
Transcribed Image Text:MSI's educational products currently are sold without any supplemental materials. The company is considering the inclusion of instructional materials such as an overhead slide presentation, potential test questions, and classroom bulletin board materials for teachers. A summary of the expected costs and revenues for MSI's two options follows: CD with Instructional Estimated demand Estimated sales price Estimated cost per unit Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit manufacturing cost Additional development cost Required: CD Only 27,000 units $ 23.00 Materials 27,000 units $ 38.00 $ 2.75 $ 3.25 4.00 7.00 4.00 7.25 3.50 3.50 $ 14.25 $ 21.00 $ 105,000 1. Based on the given data, compute the increase or decrease in profit that would result if instructional materials were added to the CDs. 2. Should MSI add the instructional materials or sell the CDs without them? 3-a. Suppose that the higher price of the CDs with instructional materials is expected to reduce demand to 20,000 units. Complete the table given below based on this scenario. 3-b. Should MSI add the instructional materials or sell the CDs without them? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A Req 3B Based on the given data, compute the increase or decrease in profit that would result if instructional materials were added to the CDs. Sales Revenue Variable Costs Contribution Margin Additional Development Costs Differential Profit (Loss) CD Only CD with Instructional Materials Incremental
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