4 (8 points) Gina Company, a manufacturer of snowmobiles, is operating at 70% of plant capacity. Gina's plant manager is considering to make the 50,000 units of headlights that now being purchased from an outside supplier for $11.00 each. The Gina plant has idle equipment that could be used to manufacture the headlights. The design engineer estimates that each headlight requires $4.00 of direct materials, $3.00 of direct labor, and $6.00 of manufacturing overhead. Forty percent of the manufacturing overhead is a fixed cost that would be unaffected by this decision. Compute the amount of change in company's operating income if Gina Company manufactures the headlights internally rather than purchasing from outside supplier. Indicate Increase by "I" and Decrease by "D". Example of Answer: 40001 or 4000D (No space, comma, decimal point, or $ sign) Question 5 (8 points) Sum Manufacturing Company manufactures and sells a product called "Happy" Recent cost analysis of manufacturing, selling, and administrative costs based on monthly data has resulted in the following cost behavior: Total Monthly Fixed Costs Variable cost per Unit Manufacturing $315,000 Selling $178,500 Administrative $252,000 $6.00 $1.80 $0.70 The production capacity is 300,000 units per month. Currently company is manufacturing and selling 220,000 units of Happy at a selling price of $12 per unit. Company is considering automating the manufacturing process. This would reduce variable manufacturing costs per unit by $2.00 and will increase current monthly total fixed manufacturing costs by $250,000. By how much company's current profit will change if production is automated? Indicate Increase by "I" and Decrease by "D" Example of Answer: 40001 or 4000D (No snace.comm Question 10 (8 points) Royall's Bridal Shoppe sells wedding dresses. The average selling price of each dress is $1,500, variable costs are $800, and fixed costs per month are $99,600. How many dresses must the Royall Bridal Shoppe sell every month to yield after-tax net income of $20,000 per month, assuming the tax rate is 20%? Example of Answer: 4000 No space, comma, decimal point, or $ sign. Question 14 (8 points) Poll Manufacturing is approached by a European customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. Poll Manufacturing has a policy of adding a 10% markup to full costs and currently has excess capacity. The following per unit data apply for sales to regular customers: Variable costs: Direct materials $30 Direct labor $10 Manufacturing overhead $20 Marketing costs $10 Fixed costs: Manufacturing overhead $100 Marketing costs $20 Total costs $190 Markup (10% of total costs) $19 $209 Estimated selling price If the European customer wanted a long-term commitment, and not a one-time-only special order, for supplying this product, calculate the most likely price to be quoted assuming the markup remains same? Example of Answer: 4000 No space, comma, decimal point, or $ sign