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The Engine Guys produces specialized engines for "snow climber" buses. The company's normal monthly production...

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Accounting

The Engine Guys produces specialized engines for "snow climber" buses. The company's normal monthly production volume is 11,000 engines, whereas its monthly production capacity is 22,000 engines. The current selling price per engine is $1,500. The cost per unit of manufacturing and marketing the engines at the normal volume is as follows:HelpCosts per Unit for EnginesManufacturing Direct materials$116Direct labourVariable overhead240Fixed overheadSubtotalMarketing Variable$634FixedSubtotalTotal unit75165248874Required:Answer the following independent questions.1-a. The Provincial Bus Company wishes to purchase 780 engines in October. The bus company is willing to pay a foed fee of $1,320,000 and reimburse The Engine Guys for all manufacturing costs incurred to manufacture 780 motors. October is a busy month for The Engine Guys, and there are sufficient orders to operate at 100% capacity utilization. There will be on this government contract. Compute the incremental benefit of the contract will be no variable marketing costscremental benefit of the contract

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