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E7-9 (Algo) Analyzing Sell-or-Process-Further Decision [LO 7-2, 7-6] 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 Only 39,000 units $ 35.00 CD with Instructional Materials 39,000 units $ 50.00 $ 9.25 13.00 12.25 $ 6.75 9.00 9.00 9.50 $ 34.25 $ 105,000 9.50 $ 44.00 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: 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 21,000 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 with Instructional CD Only Incremental Materials

E7-9 (Algo) Analyzing Sell-or-Process-Further Decision [LO 7-2, 7-6] 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 Only 39,000 units $ 35.00 CD with Instructional Materials 39,000 units $ 50.00 $ 9.25 13.00 12.25 $ 6.75 9.00 9.00 9.50 $ 34.25 $ 105,000 9.50 $ 44.00 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: 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 21,000 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 with Instructional CD Only Incremental Materials

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter14: Capital Structure Management In Practice
Section14.A: Breakeven Analysis
Problem 5P
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E7-9 (Algo) Analyzing Sell-or-Process-Further Decision [LO 7-2, 7-6] 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 Only 39,000 units $ 35.00 CD with Instructional Materials 39,000 units $ 50.00 $ 9.25 13.00 12.25 $ 6.75 9.00 9.00 9.50 $ 34.25 $ 105,000 9.50 $ 44.00 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: 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 21,000 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 with Instructional CD Only Incremental Materials <Req 1 Req 2 >
Transcribed Image Text:E7-9 (Algo) Analyzing Sell-or-Process-Further Decision [LO 7-2, 7-6] 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 Only 39,000 units $ 35.00 CD with Instructional Materials 39,000 units $ 50.00 $ 9.25 13.00 12.25 $ 6.75 9.00 9.00 9.50 $ 34.25 $ 105,000 9.50 $ 44.00 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: 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 21,000 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 with Instructional CD Only Incremental Materials <Req 1 Req 2 >
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