1.Han Products manufactures 36,000

\fRequired 1 Required 2 Required 3 Calculate the contribution margin per pound of the constraining resource for each product. ( Round your answers to 2 decimal places.) Product A Product B Product C Contribution margin per pound of the constraining resource equi Required 2 3Required 1 Required 2 Required 3 What is the maximum contribution margin that the company can earn per month if it makes optimal use of its 6,000 pounds of materials? ( Round your intermediate calculations to 2 decimal places.) Maximum contribution margin (Prepared from a situation suggested by Professor John W. Hardy.) Lone Star Meat Packers is a major processor of beef and other meat products. The company has a large amount of T-bone steak on hand, and it is trying to decide whether to sell the T-bone steaks as they are initially cut or to process them further into filet mignon and the New York cut. If the T-bone steaks are sold as initially cut, the company figures that a 1-pound T-bone steak would yield the following profit: Selling price ($2.de per pound) $ 2.90 Less joint costs incurred up to the split-off point where T-bone steak can be identified as a separate product 1.35 Profit per pound $ 0.65 If the company were to further process the T-bone steaks, then cutting one side of a T-bone steak provides the filet mignon and cutting the other side provides the New York cut. One 16-ounce T-bone steak cut in this way will yield one 6-ounce filet mignon and one 8-ounce New York cut: the remaining ounces are waste. It costs $0.20 to further process one T-bone steak into the filet mignon and New York cuts. The filet mignon can be sold for $4.40 per pound, and the New York cut can be sold for $3.40 per pound. Required: 1. What is the financial advantage (disadvantage) of further processing one T-bone steak into filet mignon and New York cut steaks? 2. Would you recommend that the T-bone steaks be sold as initially cut or processed further? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the financial advantage (disadvantage) of further processing one T-bone steak into filet mignon and New York cut steaks? (Do not round intermediate calculations, Round your answer to 2 decimal places.) per unit\fPolaski Company manufactures and sells a single product called a Rel. lCiperating at capacity. the company can produce and sell 48.000 Flets per year. Costs associated with This level of production and sales are given below: unit rural Direct materials .1 20 5 950,030 Direct labor 3 334.939 Variable manufacturing overhead. 3 m-d-e Fixed manuFacturing overhead 7 335.339 Variable selling expense It 192,000 Fixed selling expense 5 233.080 Total cost $- 118 3 2,304,030 [ The Flets normally sell for $53 each. Fixed manufacturing overhead is $330000 per year within the range obi-2.000 through 48.000 Rets per year. Pequlrecl: 'I. Assume that due to a recession. Polaslci Company expects to sell only #1000 Rets through regular channels next year. A large retail chain has offered to purchase 6.000 Rets if Folaslci is willing to accept a 10% discount offthe regular price. There would be no sales commissions on this order. thus. variable selling expenses would be slashed by ?E'ii'1 However. Polaski Company would have to purchase a special machine to engrave the retail chain's name on the 6.000 units. This machine would cost $12000. Fola ski Company has no assurance that the retail chain will purchase additional units in The future. Ililihat is the ns ncial advantage [disadvantage] of accepting the special order? [Round your lntatmcdlatc calculations to 2 decimal places.) 1 Refer to the original data. Assume again that Polaski Company expects to sell only 42.000 Rets through regular channels next year. The US. Army would like to make a one-time-oniy purchase of 5.000 Rets. The Army would payr a xed fee of$1.40 per Ret. and it would reimburse Polaslci Company for all costs of production {Variable and xed} associated with the units. Because the army would pick up the Flets with its own trucks. there would be no variable selling expenses associated with this order. What is the nancial advantage {disadvantage} of accepting the U.S. Army's special order? 3. Assume the same situation as described in {2} above. except that the company expects to sell 48.000 Rets through regular channels next year. Thus. accepting the US. Army's order would require giving up regular sales of 6.000 Rets. Given this new info rrnation. what is the ns ncial advantage [disadvantage] ofaccepting the LLS. Anny's special order'? The contribution format income statement for Huerra Company for last year is given below: Total unit Sales 5*. 990,000 $ 19.50 'u'ariable expenses 594:000 33.?0 Contribution margin ige 19.80 Fined expenses 31-d- 000 15.10 Net operating income 321000 ELIE! Incons- 'taxes .3 m 3:! 1300 1.64 Net income 3' 49,199 3' 2-45 [ The company had average operating assets of $400000 during the year. Requlred: 1. Compute the company's return on investment {RGli for the period using the ROI formula stated in terms of margin and tumover. For each of the following questions. indicate whether the margin and turnover will increase. decrease. or remain unchanged as a resutt ofthe events described. and then compute the new ROI gure. Consider each question separately. starting in each case from the data used to co mpute the original ROI in {1] above. 2 Using Lean Production. the company is able to reduce the average level of inventory by $04000. {The released funds are used to pay off short-te rm creditors] 3. The company achieves a cost savings of$.000 per year by using less costly materials. 4. The company issues bonds and uses the proceeds to purchase machinery and equipment that increases average operating assets by $121000. Interest on the bonds is $15000 per year. Sales remain unchanged. The new. more efficient equipment reduces production costs by $4.000 per year. 5. As a result of a more intense effort by salespeople. sales are increased by 20%: operating assets remain unchanged. 0. At the beginning ofthe year. obsolete inventory carried on the boot-ts at a cost of $0.000 is scrapped and written o'as a loss. I At the beginning ofthe year. the company uses $130000 of cash {received on accounts receivablei to repurchase and retire some ofits common stock. Bed & Bath, a retailing company. has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Department Total Hardware Linens Sales $ 4, 210,090 $ 3,040,809 $ 1,178, 080 Variable expenses 1, 315,098 913,898 492, 980 Contribution margin 2, 895,090 2, 127, 808 768,980 Fixed expenses 2, 280,908 1, 320,898 880, 909 Net operating income (loss) 695,090 Be7, 808 $ (112,080) A study indicates that $375.000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 18% decrease in the sales of the Hardware Department. Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department?Posters.com is a small Internet retailer of high-quality posters. The company has $880,000 in operating assets and fixed expenses of $155,000 per year. With this level of operating assets and fixed expenses, the company can support sales of up to $5,000,000 per year. The company's contribution margin ratio is 9%, which means that an additional dollar of sales results in additional contribution margin, and net operating income, of 9 cents. Required: 1. Complete the following table showing the relation between sales and return on investment (ROI). 2. What happens to the company's return on investment (ROI) as sales increase? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Complete the following table showing the relation between sales and return on investment (ROI). (Round your percentage answers to 2 decimal places.) Sales Net Average ROI Operating Operating Income Assets 4,500,000 250,000 880,000 4,600,000 259,000 880,000 3 4,700,000 S 268.000 880,000 3 4,800,000 277,000 3 880,000 S 4,900,000 286,000 880,000 S 5,000,000 205.000 8:80.000Comparative data on three companies in the same service industry are given below: Required: 2. Fill in the missing information. (Round the "Turnover" and "ROI" answers to 2 decimal places.) Company A B C fix Sales S 5.451.000 1.778.000 5.842.000 Net operating income 981.180 S 268.700 233.680 Average operating assets 2.370.000 1.244.600 $ 2.540.000 Margin 18 9% 15 % 4 96 the Turnover 2.30 1.43 2.30 Retum on investment (ROI) 41.40 9% 10.50 96 9.20 9% yellow PleaseRequired 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 As a result of a more intense effort by salespeople, sales are increased by 20%; operating assets remain unchanged. (Round your intermediate calculations and final answers to 2 decimal places.) Effect Margin 6.90 9% Decrease fix Turnover 2.40 Increase ROI 16.53 9% Unchanged the yellow pleaseRequired 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 At the beginning of the year, obsolete inventory carried on the books at a cost of $17,000 is scrapped and written off as a loss. (Round your intermediate calculations and final answers to 2 decimal places.) Effect Margin 6.57 9% Decrease fix Turnover 2.00 Unchanged ROI 13.10 9% Decrease the yellow