Question

I have started to answer this question but i am stuck. Not sure if what i have answered so far is correct.

Complete this question by entering your answers in the tabs below. Required A Required B Required c Considering only profit, determine the minimum quantity of backpacks in the special order that would make it profitable. (Round your final answer to the nearest whole unit.) The minimum quantity of backpacks units < Required B Required c >

Answer 1

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	All cost in $'000
	Status Quo	Alternative	Difference	Calculation of Diff
	469000 Unit	507000 Unit
Revenue-A	37,051
Regular selling price -$79 / Unit
( Number of Unit - 469000)
Revenue-469000*$79/ unit
Additional 38000 backpacks
Selling rate $54/ unit
469000*$79/ unit + 38000 unit *$54/ unit		39,103	2,052	($39103-$37051)
Less- Variable cost
Material cost
469000*$19.90/ unit	9,333
469000*$19.9/ unit + 38000 unit *$19.9+$5.90/ unit		10,314	980	($10321-$9,333)
Labour cost
469000*$13.90/ unit	6,519
469000*$13.9/ unit + 38000 unit *$13.9+$3.4/ unit		7,177	657	($7165-$6519)
Variable Overhead
469000*$6.90/ unit	3,236
469000*$6.9/ unit + 38000 unit *$6.9+$2.4/ unit		3,590	353	($3578-$3236)
Total Variable cost-B	19,088	21,080	1,991
Contribution Margin(A-B)	17,963	18,024	61
Less Fixed cost
As per Question amount of
Fixed cost - $3705100	3,705.10	3,705.10	-
As per Question amount of
One time rental testing Equipment		68.80	69
$68800
Operating Profit/ (loss)	14,258	14,250	-8

b)	After consider all additional cost supprt to produce additional
	38000 units - giving company NEGATIVE Operating Profit MOVEMENT ( -$8K)
	So not accepted

c)	Special order Minimum Quantity	$/ Unit
	Material cost( As above )	25.80
	Labour cost	17.30
	Variable Overhead	9.30
	Total Variable cost-B	52.40
	Selling Price-A	54
	Contribution Margin per unit(A-B)=D	2
	Fixed cost additional ( lease Rental)$- C	68,800
	Number of unit (C/D)	43,000
	Special order Minimum Quantity	43,000