E21 - M4-17 The current production volume is 100,000...

M4-17
The current production volume is 100,000 units ($4,400,000/$44).
The variable production costs are ($3,200,000 - $800,000)/100,000 = $24.
Hence, at a unit selling price of $30, the order provides a contribution of $6
per unit and a total contribution of $75,000 ($6 × 12,500).
Even if it is profitable, the large sale to the hospital supply company may
take away some of the attention of management from regular customers, and
it may upset regular customers who learn of the lower price, resulting in
pressure to lower overall prices.
E4-21
a. The variable costs of manufacturing and selling can be determined using
the high-low method:
Variable costs per unit = ($3,060,000 - $2,745,000) = $5.25
(240,000 - 180,000)
Now we can determine the unit contribution margin and the total
contribution from accepting the order.