Manufacturing lead times, relevant revenues, and relevant costs. The Brandt Corporation makes wire harnesses for the aircraft industry. Brandt is uncertain about when and how many customer orders will be received. Brandt makes harnesses only after receiving firm orders from its customers. Brandt has recently purchased a new machine to make wire harnesses, one for Boeing airplanes (B7) and the other for Airbus Industries airplanes (A3).

The annual capacity of the new machine is 7,200 hours. The following information is available for next year:

Annual Average Average Selling Price per Order Number Manufacturing IfAverage Manufacturing Lead Time Is of Time Customer Orders Required Fewer than 240 Hours More than 240 Hours Variable Costs per Order Inventory Carrying Costs per Order per Hour B7 125 48 hours $18,000 $17,280 $12,000 $0.50 A3 10 60 hours 16,200 15,552 10,800 0.45 Required 1. Calculate the average manufacturing lead times per order

(a) if Brandt manufactures only B7 and

(b) ifBrandt manufactures both B7 and A3.

2.Even though A3 has a positive contribution margin, Brandt’s managers are evaluating whether Brandt should

(a) make and sell only B7 or

(b) make and sell both B7 and A3.
Which alternative will maximize Brandt’s operating income? Show all calculations.
/'3. 'What other factors should Brandt consider in choosing between the alternatives in requirement 2?