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ABC Company produces two types of filing storage, Standard and Deluxe. Both filing storages have to go through its own assembly and finishing departments. However,

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ABC Company produces two types of filing storage, Standard and Deluxe. Both filing storages have to go through its own assembly and finishing departments. However, both of them must go through the painting department. The following information is available: Capacity of painting department 2,460 hours Standard Deluxe Contribution margin $ 75.00 $ 120.00 Painting hours for each product 3.0 5.0 Required: Compute the contribution margin per painting hot (2 Marks) for each product. Standard Deluxe Compute the optimal mix of units for each produc (5 Marks) assuming capacity of painting hour is the only Standard constraint for production of the products. Explain the reason for your choice of optimal mix. (Concept 2 Marks and Communication 2 Marks) Deluxec) Compute the total contribution margin earned for (1 Mark) the optimal mix. ABC Company packages and distributes animal feed. The following are information for the animal feed: Material cost $ 9.60 per tone Estimated sales 3,600 tones Capacity 6,000 tones Fixed overhead $ 12,000 The Company has received an offer from a foreign firm and sales to this foreign firm would not affect domestic sales. However, the Company will incur additional fixed overhead cost of: $ 2,400 Foreign firm offer $ 13.20 per tone Foreign firm order 1,200 tones Required: d) Compute the change in operating income if ABC (3 Marks) Company decides to accept the offer.ABC Company is a discount department store that has three major departments, groceries, general merchandise and drugs. Management is considering dropping groceries, which have consistently shown a net loss. The space vacated by the dropping of groceries would remain idle and the common fixed cost would remain the same. The following is the financials for the three departments: Total Groceries Merchandise Drugs Sales $ 1,425,000 $ 750,000 $ 600,000 $ 75,000 Variable costs 990,000 600,000 345,000 45,000 Contribution margin $ 435,000 $ 150,000 $ 255,000 $ 30,000 Fixed expenses Direct fixed costs $ 198,750 $ 112,500 $ 75,000 $ 11,250 Common fixed costs 135,000 45,000 75,000 15,000 Operating income 101,250 $ (7,500) $ 105,000 $ 3,750 Required: Compute the change of operating income should (4 Marks) the company drop groceries

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