ACC – SafeRide, Inc.
SafeRide, Inc. produces air bag programs that it sells to North American car producers. Though the firm has a capability of 300,000 models per 12 months, it's at present producing at an annual charge of 180,000 models.SafeRide, Inc. has acquired an order from a German producer to buy 60,000 models at $9.00 every.Budgeted prices for 180,000 and 240,000 models are as follows:180,000 Models 240,000 UnitsManufacturing costsDirect materialsDirect laborSelling and administrativeTotalCosts per unitManufacturingSelling and administrativeTotal1,980,000765,0002,280,000780,000$ three,zero60,000$ 11.004.25$ 9.503.25$ 15.25Complete$ 600,000420,0001,260,000$ 2,745,000Manufacturing unit overhead$ 450,000315,0001,215,000$ 12.75Gross sales to North American producers are priced at $20 per unit, however the gross sales supervisor believes the companyshould aggressively search the German enterprise even when it ends in a lack of $three.75 per unit. She believesobtaining this order would open up a number of new markets for the corporate's product. The final managercommented that the corporate can not tighten its belt to soak up the $225,000 loss ($three.75 60,000) it wouldincur if the order is accepted.(a) Calculate the web profit (value) of accepting the order from the German enterprise.(b) Calculate the web profit (value) of accepting the order from the German enterprise, assuming thecompany is working at full capability.