Part 2. Question 1. ICA L imited makes toy airplanes. One plane is an excellent...
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Part 2. Question 1. ICA L imited makes toy airplanes. One plane is an excellent replica of a 737,it sells for Vacation Airlines wants to purchase 12,000 planes at $1.75 each to give to children nying unaccompanied. Costs per plene are as follows: 1. Direct materials - $1.00 2. Direct labour -$0.50 3. Variable overhead $0.10 . Fixed overhead $0.90 No yariable marketing costs would be incurred. The company is operating sjnnc k e maximum productive capacity. No fixed costs are avoidable. fo ants its own logo and colors on the planes. The cost of the decais s es th order is ecial inachine costing $1,500 would be required to affix the decals plete, the machine would be scrap Yes, income will increase by $300.x o, income will decrease by $180. $0.01 per piane and decals. After the order is ped. Should the special order be accepted? om a will increase by $180 . dditional information: Average usage100 per day Maximum usage 180 III Minimun usage 50 IV. Lead time for repliishment 2 -4 days Re-order quantity 800 VI. Re-order level 720 Calculate the following: 1. Maximum level 2. Minimum level
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