Reference no: EM133047817

Question - Wordmark Corporation's Cupertino, California, plant manufactures chips used in personal computers Its practical capacity is 6.000 chips per week, and fixed costs are $71.000 per week. The selling price is $530 per chip. Production this quarter is 5,400 chips per week. At this level of production, variable costs are $2.376.000 per week.

Requirements -

(a) What will the plant's profit per week be if it operates at practical capacity?

(b) Suppose that a new customer offers $520 per chip for an order of 100 chips per week for delivery beginning this quarter. If this order is accepted, production will increase from 5,400 chips at present to 5,500 chips per week. What is the estimated change in the company's profit if it accepts the order?

(c) Suppose that the new customer in part b offered $520 per chip for an order of 1,000 chips per week and that Wordmark cannot schedule overtime production. Consequently, it would have to give up some of its current sales to fill the new order for 1,000 chips per week What is the estimated change in Wordmark's profit if it accepts this order for 1 000 chips per week?