Assignment 1. The Robotics Company Aguan The company Aguan manufactures robots for the healthcare industry. Aguan's assortment con- sists of three models: Type 1, Type 2 and Type 3. All types are manufactured in the same highly au- tomated production facility. There are three processes in manufacturing robots: 1. Build up and assembly of control electronics 2. Construction and assembly of the exterior part of the robot 3. Programming and testing The following data are from the budget for 2020. The budgeted production costs consist of Material costs per unit Type 1 Type 2 Type 3 Process 1 8,000 9,500 10,200 Process 2 12,000 11,000 17,800 Process 3 20,000 25,000 27,500 Total material costs per unit 40,000 45,500 55,500 Production costs also include variable manufacturing overhead (VMO). Budgeted variable manu- facturing overhead per unit amounts to Variable manufacturing Type 1 Type 2 Type 3 overhead per unit VMO 11,500 13,700 15,200 Budgeted fixed manufacturing overhead (FMO) totals 52.5 million. The fixed manufacturing over- head is associated with the production facility housing the three processes. Fixed overhead is allo- cated to work in progress based on machine hours. The budgeted fixed overhead cost rate is cal- culated as budgeted fixed manufacturing overhead divided by budgeted capacity utilization (budg- eted capacity utilization is the number of machine hours necessary for the budgeted production). The maximum (practical) capacity amounts to 205,000 machine hours. Budgeted direct labor and machine hours to produce the three types are Ressource consumption Type 1 Type 2 Type 3 per unit in hours Direct labor hours 15 20 23 Machine hours 16 12 22Labor costs amount to 225 per hour. Sales prices as well as budgeted production and sales are (budgeted production equals budgeted sales) Type 1 Type 2 Type 3 Sales price per unit 65,000 72,000 87,500 Budgeted production in units 5,000 4,500 3,000 Aguan's fixed sales and administrative costs are 8.75 million. 1.1 (10 points) Calculate total production costs per unit and calculate contribution margin per unit for each of the three robot types. 1.2 (10 points) A new customer arrives on the scene and submits a one-time order (also called a special order) for 200 units of Type 3. The 200 units is in addition to the budgeted production of 3,000 units. What is the minimum acceptable price at which Aguan should accept the order? (Provide the arguments behind your answer). 1.3 (10 points) The new customer instead asks to buy 300 units of Type 3 for a total price of 26,250,000. The or- der is a take-it-or-leave-it order meaning that Aguan either accepts delivering the 300 units or de- clines the order altogether. What is the optimal decision for Aguan? (Provide the arguments be- hind your answer). 1.4 (10 points) Based on your answer in 1.3 show Aguan's budgeted variable costing income statement for 2020. Show the budgeted contribution margin for each type as well. Remember to show total profit (net profit).Assignment 2: Danish Wine A/S Danish Wine A/S farms grapes at their own vineyard. After harvest, grapes are processed into juice and the firm produces two types of vine. A high-quality product LSV (that stands for local special wine in Danish) is sold through small boutiques and specialized dealerships. The second type, called Bordvin, is a regular table wine (the name in Danish). Bordvin is sold only in supermarkets. In 2019, the firm harvested 375 metric tons of grapes and it estimates that the cost of farming and harvesting was $10,000 pr. ton. Danish Wine A/S is processing the grapes to juice in batches of 25 ton. The juice, that is produced in the beginning of a batch, is of high quality and can be used for LSV production. Juice produced towards the end of a batch is of low quality and can only be used for Bordvin. A specialist is moni- toring each batch and determines, when the quality is no longer sufficiently high for the LSV prod- uct. The following information concerning 2019 is available: . On average, each metric ton of grape produces 800 liters of juice (20% of the weight is grape peels and Danish Wine A/S does not know of any uses for this scrap product. Also, 1 metric ton =1.000 kg and 1 kg can be equated to 1 liter). About 40% of the juice was approved for LSV by the specialist. The cost in the juice production process is (in $): Buildings 1,250,000 Machinery and tools 1,000,000 Labor 750,000 Cleaning 750,000 Total cost 3,750,000 Product line cost of LSV and Bordvin were respectively 2.2 and 2.5 million dollars. . At the end of production, packaging and transportation costs are added. In 2019 these were respectively 1.8 and 2.66 million dollars. All product line costs are variable. Fixed sales and administration costs amounted to 1 million dollars. All juice produced in 2019 was used to produce LSV and Bordvin. Alternatively, Danish Wine A/S could have sold the high-quality juice for $32 pr. liter and the rest of the juice for $15 pr. liter. During 2019, Danish Wine A/S produced and sold: LSV Bordvin Number of cases sold/produced 20,000 38,000 Sales price pr. case 500 250Question 2.1 (10 points) Provide an income statement for 2019 (for both product lines and the total) under the assump- tion, that Danish Wine A/S uses the physical measure method for allocating joint cost. Question 2.2 (6 points) Should Danish Wine A/S continue producing and selling both LSV and Bordvin? Question 2.3 (6 points) Show (in percentage and monetary amount) joint cost allocation to LSV and Bordvin under the as- sumption, that Danish Wine A/S uses the sales value at split-off method. Question 2.4 (6 points) Show (in percentage and monetary amount) joint cost allocation to LSV and Bordvin under the as- sumption, that Danish Wine A/S uses the net realizable value method. Question 2.5 (8 points) Why do firms allocate joint costs? What are the advantages and disadvantages of each of the allo- cation methods used (in question 2.1, 2.3 and 2.4) in relation to decision making? Explain, how the joint cost should be treated in a decision-making context. Question 2.6 (4 points) A local, organic farmer contacts Danish Wine A/S. He is interested in purchasing the grape peels for $1,000 per ton, as he can use these as fodder for pigs. Explain, how should Danish Wine A/S change calculations in question 2.3 and 2.4 after they learn about this potential use for grape peels (no calculations necessary)