‘Scanned with CamScannera EXHIBIT 1 Costs per Unit for Hydrauic Holts a ‘Unt manutoturing cost $550 arable mateals 225 arable labor 420 Variable overhead 560, Fined overhead a “Tota unit manufacturing costs Unt marketing cost ms Fed | a 1045 Total unit marketing costs ae Total unit costs S300 Questions The following questions refer only tothe data given in Exhibit. Unless otherwise tated, assume thee is no ‘commeston ferween the situations deseribed in the questions; teat each independently. Unless otherwise sated assume a regular seling price of $4380 per unit, lgnore income taxes and other costs not men. tioned in Exhibit I or ina question isle 1. What ste breakeven volume in nis? In sles dolls? 2 Markt research estimates that monthly volume ould increas 03,500 units, which swell within fost production capacity limitations, te pce were cut from $4,380 $3,850 per unt. Assuing the cost behavior pater implied by the data Exhibit 1 ae comet, would you recommend tht this action be taken? What would Be the impact on monthly sales, oss and income? 3. On March 1, a contact offer is made to Hospital Supply by the federal goverment to suppy 500 “unis to Veterans Administration hospitals ordi ry by March 31. Because ofan unas lage number of rsh odes from is regular eustomers, Hospital Supply plans o produce 4:00 units ding Marc, which ill use al availble capacity the government onder i accepted, 500 units normally Sold to regular customers would be lost oa eon: government would a share of Mach produc tion costs, pus pa a ied fe (profi) of $275 000. rer scl ate al oe oe Econ aaa oul oped Ge gree a a icone oa pls epee cooacln iii pie cope Staton oc cae (epee rick donate aoe eee awit ct de baa a fr 1.00 ea bapa ce isin oe neo te a eis de villous SCO il cn of oblate ce as ‘itil 522.00, Domest neared ‘ated hs ede Wha enim a pres Hop Sippy shoud entero Oro am 5. Aa eno 20 ns fa ose mt theta reais ne Sco es mate ‘ok oh repr hamlet eacel pe the entry wl son be alates Wt mii pe that woul be cp sit ew unt : 6.4 propo esd fom an cui om ‘ie will mae 1000 ahs ws ‘month and ship them directly to Hospital Supply ‘Customers as orders are received from Hospital Su Dias fc, Hol Sup ed an ‘costs would be unaffected, but its variable marketing ots wold be ety 20 percent a S20 ert for these 1,000 units produced by the contact ‘Scanned with CamSeanner‘Scanned with CamScanner