Island Industries, Inc., operates its production department only when orders are received for one or both of its two products, two sizes of metal disks. The manufacturing process begins with the cutting of doughnut-shaped rings from rectangular strips of sheet metal; these rings are then pressed into disks. The metal sheets, each 4 feet long and weighing 32 ounces, are purchased at $1.36 per running foot. The department has been operating at a loss for the past year, as shown in the following table: nki4

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Sales for the year $172,000 Expenses... Net loss for the department. 177,200 $(5.200) The following information is available: 1 Ten thousand 4-foot pieces of metal yielded 40,000 large disks, each weighing 4 ounces and selling for $2.90, and 40,000 small disks, each weighing 2.4 ounces and selling for $1.40. 2 The corporation has been producing at less than normal capacity and has had no spoilage in the cutting step of the process. The skeletons remaining after the pieces have been cut are sold for scrap at $.80 per pound. 3 The variable conversion cost of each large disk is 80% of the disk's direct materials cost, and the variable conversion cost of each small disk is 75% of the disk's direct materials cost. Variable conversion costs are the sum of direct labor and variable factory overhead. Required: For each of the parts manufactured, prepare a schedule computing: 1 Unit materials cost after deducting the value of salvage (or scrap value) 2 Unit variable conversion cost 3 Unit contribution margin 4 Total contribution margin for all units sold (AICPA Adapted.)