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Case 1548 Pricing in a Tight Market; Possible Plant Closing (L0 15-1, 15-10) Gargantuan Industries is a multiproduct company with several manufacturing plants. The Boisel Plant manufactures and distributes two household cleaning and polishing compounds, standard and commercial, under the Super Clean label. The forecasted operating results for the first six months of the current year, when 135,000 cases of each compound are expected to be manufactured and sold, are presented in the following statement. gaRgaNTuAN INDUSTRIES: BOtSE PLANT Forecasted Results of operations The fixed selling and administrative expenses are allocated between the two products on the basis of dollar sales volume. The standard compound sold for $47 a case and the commercial compound sold for $74 a case dusing the first six months of they The manufacturing costs, by case of product, are presented in the schedule below. Each product is manufactured on a separate production line. Anual normal manufacturing capacity is 270,000 cases of each product. However, the plant is capable of procucing 320,000 coses of standard compound and 420,000 cases of commercial compound annually. "Depreciation charges are 50 percent of the fixed manufacturing overhead of each line- The following schedule reflects the consensus of top management regarding the price-volume altematives for the Super Clean products for the last six months of the current year. These are essentially the slame aiternatives management had during the first six months of the year. "Depreciation charges are 50 percent of the fixed manufacturing overhead of each line The following schedule reflects the consensus of top management regarding the price-volume aiternatives for the Super Clean products for the last six months of the current yeat. These are essentially the same alternatives management had during the first six months of the year. Gargantuan's top management believes the loss for the first six months reflects a tight profit margin caused by intense competilion. Management also believes that many companies will leave this market by next year and profit should improve. Required: 1. What unit selling price should Gargantuan Industries select for each of the Super Clean compounds for the remaining sia montils of the year? 2.e. independently of your answer to requirement 1, assume the optimum aiternatives for the last six months were as folliws a selling price of $53 and volume of 57,000 cases for the standard compound, and a selling price of $77 and volume of 42,000 cases for the commerciai compound. Caiculate the contribution margin. 2.b. Given the scenario in requirement (2-a), should management consider closing down its operations until January tof the next year in order to minimize its iosses? Complete this question by entering your answers in the tabs below. What unit seliing price should Gargantuan Industries select for each of the Super Clean compounds for the remaining six months of the year? Mequirea: 1. What unit selling price should Gargantuan lndustries select for each of the super clear compounds for the remaining six months of the year? 2-a. Independently of your answer to requinement 1, assume the optim um alternatives for the last six months were as followe. a selling price of $53 and volume of 57,000 cases for the standard compound. and a selling price of 577 and yolume of 42 , 000 cases for the commercial compound. Calculate the contribution margin. 2.b. Given the scenario in requirement (2-a), should management consider closing down its operations unitil January 1 of the next year in order to minimize its losses? Complete this duestion by entering your answers in the tabs below. Independently of your answer to requirement (1), assume the optimum alternatives for the last six months were as follows: a selling price of $53 and volume of 57,000 cases for the standard compound, and a selling price of $77 and volume of 42,000 cases for the commercial compound. Calculate the contribution margin. (Enter your answers in thousands rounded to 1 decimal place. Gargantuan's top management believes the loss for the first six months reflects a tight profit margin caused by intense competition. Management also believes that many companies will leave this market by next year and profit should improve. Required: 1. What unit selling price should Gargantuan Industries select for each of the Super Clean compounds for the remaining six months of the year? 2-a. Independently of your answer to requirement 1, assume the optimum alternatives for the last six months were as follows: a selling price of $53 and volume of 57,000 cases for the standard compound, and a selling price of $77 and volume of 42,000 cases for the commercial compound. Calculate the contribution margin. 2-b. Given the scenario in requirement (2-a), should management consider closing down its operations until January 1 of the next year in order to minimize its losses? Complete this question by entering your answers in the tabs below. Given the scenario in requirement (2-a), should management consider closing down its operations until January 1 of the next year in order to minimize its losses? Case 1548 Pricing in a Tight Market; Possible Plant Closing (L0 15-1, 15-10) Gargantuan Industries is a multiproduct company with several manufacturing plants. The Boisel Plant manufactures and distributes two household cleaning and polishing compounds, standard and commercial, under the Super Clean label. The forecasted operating results for the first six months of the current year, when 135,000 cases of each compound are expected to be manufactured and sold, are presented in the following statement. gaRgaNTuAN INDUSTRIES: BOtSE PLANT Forecasted Results of operations The fixed selling and administrative expenses are allocated between the two products on the basis of dollar sales volume. The standard compound sold for $47 a case and the commercial compound sold for $74 a case dusing the first six months of they The manufacturing costs, by case of product, are presented in the schedule below. Each product is manufactured on a separate production line. Anual normal manufacturing capacity is 270,000 cases of each product. However, the plant is capable of procucing 320,000 coses of standard compound and 420,000 cases of commercial compound annually. "Depreciation charges are 50 percent of the fixed manufacturing overhead of each line- The following schedule reflects the consensus of top management regarding the price-volume altematives for the Super Clean products for the last six months of the current year. These are essentially the slame aiternatives management had during the first six months of the year. "Depreciation charges are 50 percent of the fixed manufacturing overhead of each line The following schedule reflects the consensus of top management regarding the price-volume aiternatives for the Super Clean products for the last six months of the current yeat. These are essentially the same alternatives management had during the first six months of the year. Gargantuan's top management believes the loss for the first six months reflects a tight profit margin caused by intense competilion. Management also believes that many companies will leave this market by next year and profit should improve. Required: 1. What unit selling price should Gargantuan Industries select for each of the Super Clean compounds for the remaining sia montils of the year? 2.e. independently of your answer to requirement 1, assume the optimum aiternatives for the last six months were as folliws a selling price of $53 and volume of 57,000 cases for the standard compound, and a selling price of $77 and volume of 42,000 cases for the commerciai compound. Caiculate the contribution margin. 2.b. Given the scenario in requirement (2-a), should management consider closing down its operations until January tof the next year in order to minimize its iosses? Complete this question by entering your answers in the tabs below. What unit seliing price should Gargantuan Industries select for each of the Super Clean compounds for the remaining six months of the year? Mequirea: 1. What unit selling price should Gargantuan lndustries select for each of the super clear compounds for the remaining six months of the year? 2-a. Independently of your answer to requinement 1, assume the optim um alternatives for the last six months were as followe. a selling price of $53 and volume of 57,000 cases for the standard compound. and a selling price of 577 and yolume of 42 , 000 cases for the commercial compound. Calculate the contribution margin. 2.b. Given the scenario in requirement (2-a), should management consider closing down its operations unitil January 1 of the next year in order to minimize its losses? Complete this duestion by entering your answers in the tabs below. Independently of your answer to requirement (1), assume the optimum alternatives for the last six months were as follows: a selling price of $53 and volume of 57,000 cases for the standard compound, and a selling price of $77 and volume of 42,000 cases for the commercial compound. Calculate the contribution margin. (Enter your answers in thousands rounded to 1 decimal place. Gargantuan's top management believes the loss for the first six months reflects a tight profit margin caused by intense competition. Management also believes that many companies will leave this market by next year and profit should improve. Required: 1. What unit selling price should Gargantuan Industries select for each of the Super Clean compounds for the remaining six months of the year? 2-a. Independently of your answer to requirement 1, assume the optimum alternatives for the last six months were as follows: a selling price of $53 and volume of 57,000 cases for the standard compound, and a selling price of $77 and volume of 42,000 cases for the commercial compound. Calculate the contribution margin. 2-b. Given the scenario in requirement (2-a), should management consider closing down its operations until January 1 of the next year in order to minimize its losses? Complete this question by entering your answers in the tabs below. Given the scenario in requirement (2-a), should management consider closing down its operations until January 1 of the next year in order to minimize its losses