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Alton Incorporated is working at full production capacity producing $37,000$ units of a unique product. Manufacturing costs per unit for the product are as follows:

Direct materials $ $8$

Direct labor $7$

Manufacturing overhead $9$

Total manufacturing cost per unit $ $24$

The per$-$unit manufacturing overhead cost is based on a $$6$ variable cost per unit and $$111,000$ fixed costs. The nonmanufacturing costs, all variable, are $$6$ per unit, and the sales price is $$65$ per unit.

Sports Headquarters Company $($SHC$)$ has asked Alton to produce $6,000$ units of a modification of the new product. This modification would require the same manufacturing processes. However, because of the nature of the proposed sale, the estimated nonmanufacturing costs per unit are only $$3($not $$6).$ Alton would sell the modified product to SHC for $$50$ per unit.

Required

$1-$a$.$ Calculate the contribution margin for $6,000$ units for both the current and special order.

$1-$b$.$ Should Alton produce the special order for SHC$?$

$2.$ Suppose that Alton Incorporated had been working at less than full capacity to produce $31,300$ units of the product when SHC made the offer. What is the minimum price per unit that Alton should accept for the modified product under these conditions?Alton Incorporated is working at full production capacity producing $37,000$ units of a unique product. Manufacturing costs per unit for

the product are as follows:

The per$-$unit manufacturing overhead cost is based on a $$6$ variable cost per unit and $$111,000$ fixed costs. The nonmanufacturing

costs, all variable, are $$6$ per unit, and the sales price is $$65$ per unit.

Sports Headquarters Company $($SHC$)$ has asked Alton to produce $6,000$ units of a modification of the new product. This modification

would require the same manufacturing processes. However, because of the nature of the proposed sale, the estimated

nonmanufacturing costs per unit are only $$3($not $$6).$ Alton would sell the modified product to SHC for $$50$ per unit.

Required

$1-$a$.$ Calculate the contribution margin for $6,000$ units for both the current and special order.

$1-$b$.$ Should Alton produce the special order for SHC $?$

Suppose that Alton Incorporated had been working at less than full capacity to produce $31,300$ units of the product when SHC made

the offer. What is the minimum price per unit that Alton should accept for the modified product under these conditions?

Complete this question by entering your answers in the tabs below.

Calculate the contribution margin for $6,000$ units for both the current and special order.

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