1.Next, ignoring the Sedona Stout calculations in requirement 3, consider David's question regarding what product line the sales people should emphasize.David wants their sales efforts to maximize profits and utilize the company's current capacity.What would you tell him?Explain your rationale.

Module 4 Graded Assignment Part A Acme Manufacturing is trying to decide whether to eliminate Department Z, which has produced low profits or losses for several years. The company's departmental income statements show the following: Sales Cost of goods sold Gross profit Operating expenses Direct expenses Advertising Store supplies used Depreciation - store equipment Total direct expenses Allocated expenses Sales salaries Rent expense Bad debts expense Office salary Insurance expense Miscellaneous office expense Total allocated expenses Total expenses Net income (loss) A $700,000 461,300 238,700 Z $175,000 125,100 49,900 Total $875,000 586,400 288,600 27,000 5,600 14,000 46,600 3,000 1,400 7,000 11,400 30,000 7,000 21,000 58,000 70,200 22,080 21,000 20,800 4,200 1,700 139,980 186,580 $ 52,120 23,400 5,520 4,000 5,200 1,400 2,500 42,020 53,420 $ (3,520) 93,600 27,600 25,000 26,000 5,600 4,200 182,000 240,000 $ 48,600 The plant controller provided the following additional information: The company has one office worker who earns $500 per week, or $26,000 per year, and four salesclerks who each earns $450 per week, or $23,400 per year for each salesclerk. The full salaries of three salesclerks are charged to Department A. The full salary of one salesclerk is charged to Department Z. Eliminating Department Z would avoid the sales salaries but not the office salary currently allocated to it. The store building is rented under a long-term lease that cannot be changed. Therefore, Department A will use the space and equipment currently utilized by Department Z. Closing Department Z will eliminate its expenses for advertising, bad debts, and store supplies; 65% of the insurance expense allocated to it to cover its merchandise inventory; and 30% of the miscellaneous office expenses presently allocated to it. Required Should Acme Manufacturing eliminate product Z? Show detailed calculations to support your decision. Part B Wally World manufactures cross country skis. Its cost of manufacturing 5,000 bindings is as follows: Direct materials Direct labor Variable overhead Fixed overhead Total manufacturing costs for 5,000 bindings $42,000 8,500 5,000 16,000 $71,500 Wally World can purchase bindings from another manufacturer for $11.00 each. They would pay an additional $1.25 per unit to have the bindings shipped to its manufacturing plant. They would add their logo to each binding for an additional $0.70 per unit. If Wally World purchases the bindings they can avoid fixed overhead costs of $7,500. Required Should Wally World continue to manufacture the bindings or purchase them from the other manufacturer? Show detailed calculations to support your decision. Chegg Wally World manufactures cross country skis. Its cost of manufacturing 5,000 bindings is as follows: Direct materials $44,000 Direct labor 8,500 Variable overhead 5,000 Fixed overhead 16,000 Total manufacturing costs for 5,000 bindings $73,500 Wally World can purchase bindings from another manufacturer for $11.00 each. They would pay an additional $1.50 per unit to have the bindings shipped to its manufacturing plant. They would add their logo to each binding for an additional $0.70 per unit. If Wally World purchases the bindings they can avoid fixed overhead costs of $7,500. Required Should Wally World continue to manufacture the bindings or purchase them from the other manufacturer? Show detailed calculations to support your decision. Manufacturing Costs per unit (if Wally world manufacture the bindings):Direct materials $44,000 Direct labor 8,500 Variable overhead 5,000 Fixed overhead 16,000 Total manufacturing costs for 5,000 bindings $73,500 Manufacturing cost per unit = $73500/5000 = $14.7 per unit Bindings Total Purchaseing cost :Purchase price per unit = $11 per unit Shiping expense per unit = $1.50 per unit Logo Expense per unit = $0.7 per unit Total Purchaseing Cost per unit = $13.20 per unit Total Purchaseing Cost = 5000*$13.2 = $66000 Less :- Fixed overhead cost = $7500 Net Purchasing cost ($66000-$7500) = $58500 Net purchasing cost per unit = $58500/5000 = $11.7 Conclusun :The Purchasing cost lower than Manufacturing cost ,than i suggestion Wally world purchase bindings