Check 1 Tuftuff Inc, sells a wide range of drums, bins, boxes, and other containers that are used in the chemical industry. One of the company's products is a heavy-duty corrosion resistant metal drum, called the WVD drum used to store toxic wastes Production is constrained by the capacity of an automated welding machine that is used to make precision welds. A total of 2.040 hours of welding time is available annually on the machine. Because each drum requires 04 hours of welding machine time annual production is limited to 5.000 drums. At present, the welding machine is used exclusively to make the WVD drums. The accounting department hos provided the following financial data concerning the WVD drums 12 $157.00 selling price per de Cost per drust Direct materials Dit later (520 per hour Manufacturi overhead Selling and distrative spent Har per $57.10 6.00 5.70 10.18 $2.00 5.65.00 Management believes 6,050 WVD drums could be sold each year if the company had sufficient manufacturing capacity. As an wtomative to adding another welding machine, management has considered buying additional drums from an outside supplier Harcer Industries, Inc. a supplier of quality products, would be able to provide up to 4800 WVD type drums per year at a price of 544 per drum, which TutStuff would resell to its customers at its normal selling price after appropriate relabeling Megon Flores, TutStuff's production manager has suggested that the company could make better use of the welding machine by manufacturing bike frames, which would require only 0.5 hours of welding machine time per trame and yet sed for far more than the drums, Megan believes that TuStuff could set up to 1640 bike frames per year to bike manufacturers at a price of 5249 each. The accounting department has provided the following data concerning the proposed new product Miran Belling price per trane Costa Dit were 5100.60 Direct Labor (18 per hour 32.00 want overed 18.00 telling and delivere 49.60 220.00 Hari per 20.00 Ches 1 1 12 points The bike frames could be produced with existing equipment and personnel. Manufacturing overhead is allocated to products on the basis of direct labor-hours. Most of the manufacturing overhead consists of fixed common costs such as rent on the factory building. but some of it is variable. The variable manufacturing overhead has been estimated at $135 per WVD drum and $1.90 per bike frame. The variable manufacturing overhead cost would not be incurred on drums acquired from the outside supplier Selling and administrative expenses are allocated to products on the basis of revenues. Almost all of the selling and administrative WVD drum whether made or purchased and would be $150 per bike frame expenses are fixed common costs, but it has been estimated that variable selling and administrative expenses amount to $.75 per All of the company's employeesdirect and indirect-are paid for full 40.00-hour work weeks and the company has a policy of laying off workers only in major recessions As soon as your analysis was shown to the top management team at TufStuff several managers got into an argument concerning how direct labor costs should be treated when making this decision. One manager argued thpt direct laboris always treated as a variable cost in textbooks and in practice and has always been considered a variable cost at TutStuft. After all, "direct" means you can directly trace the cost to products. "If direct laboris not a variable cost, what is?" Another manager argued just as strenuously that direct labor should be considered a foved cost at Turtull. No one had been laid off in over a decade, and for all practical purposes, everyone at the plant is on a monthly salary. Everyone classified as direct labor works a regular 40.00 hour workweek and overtime has not been necessary since the company adopted Lean Production techniques. Whether the welding machine is used to make drums or frames the total payroll would be exactly the same. There is enough stack. In the form of idle time, to accommodato any increase in total direct labor time that the bike frames would require. 5 Complete this question by entering your answers in the tabs below. Req1 Reg 2 Reg 3 Reg 4 Reg 48 Reg 5 Reg 6 Reg 7A Req 78 Compute the contribution margin per unit. (assume direct labor is a fixed cost] (Do not round intermediate calculations. Round your answers to 2 decimal places.) Contribution Margin a. Purchased WVD drums b. Manufactured WVD drums per unit c. Manufactured bike frames per unit per unit Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Reg 4 Reg 48 Reg 5 Reg 6 Reg 7A Reg 78 Compute the contribution margin per welding hour. (assume direct labor is a fixed cost] (Round your intermediate calculations and final answers to 2 decimal places.) 1. Manufactured WVD drums 2. Manufactured bike frames Contribution Margin per hour per hour Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Reg 4 Reg 4B Req5 Reg 6 Req 7A Reg 70 Determine the number of WVD drums (if any) that should be purchased and the number of WVD drums and/or bike frames (I any) that should be manufactured. (Assume direct labor is a fixed cost) Purchased Manufactured WVD drums Bike frames Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Reg 4 Reg 48 Regs Reg 6 Re7A Reg 78 What is the increase (decrease in net operating income that would result from this plan over current operations? (Assume direct labor is a fixed cost) (Round your intermediate calculations to 2 decimal places. Round final answer to the nearest whole dollar value) Increase (decreaso) in not operating incomo Complete this question by entering your answers in the tabs below. Reg1 Reg 2 Reg 3 Req 4 Reg 48 Reqs Reg 6 Reg 7 Reg 78 Compute the contribution margin per unit. (assume direct labor is a variable cost) (Do not round Intermediate calculations Round your answers to 2 decimal places.) Contribution Margin Purchased WVD drums per unit Manufactured WVD drums Manufactured bike frames per unit per unit Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Reg 4 Reg 48 Regs Regs Reg 7A Reg 78 Compute the contribution margin per welding hour. (assume direct labor is a variable cost] (Round your intermediate calculations and final answers to 2 decimal places.) Manufactured WVD drums Manufactured bike frames Contribution Margin per hour per hour Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req3 Reg 4 Reg 48 Reqs Red Reg 7A Reg 78 TAssume direct labor is a variable cost). Determine the number of WVD drums (if any) that should be purchased and the number of WVD drums and/or bike frames (if any) that should be manufactured. Purchased Manufactured WVD drums Bike frames Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Reg 4 Reg 4B Reqs Reg 6 Reg 7A Reg 78 What is the increase (decrease) in net operating income that would result from this plan over current operations? [Assume direct labor is a variable cost) (Do not round Intermediate calculations.) Increase (decrease in not operating income 1 - 12 points TutStuft Inc, sells a wide range of drums, bins, boxes, and other containers that are used in the chemical Industry. One of the company's products is a heavy duty corrosion-resistant metal drum, called the WVD drum, used to store toxic wastes. Production is constrained by the capacity of an automated welding machine that is used to make precision welds. A total of 2.040 hours of welding time is available annually on the machine. Because each drum requires 0.4 hours of welding machine time, annual production is Ilmited to 5,100 drums. At present the welding machine is used exclusively to make the WVD drums. The accounting department has provided the following financial data concerning the WVD drums MYDD Selling price per drun $157.00 cout per drum Direct materials $52.10 Direet labor $20 per hour) 4.00 Manufacturing overhead 5.70 Selling and administrative expense 30.20 92.00 Margin per dream 3. 65.00 20:30 24 Bo Management believes 6,050 WVD drums could be sold each year if the company had sufficient manufacturing capacity as an alternative to adding another welding machine, management has considered buying additional drums from an outside supplier. Harcor Industries, Inc. a supplier of quality products, would be able to provide up to 4100 WVD-type drums per year at a price of $144 per drum, which TutStuff would resell to its customers at its normal selling price after appropriate relabeling Megan Flores, Tuf Stuff's production manager, has suggested that the company could make better use of the welding machine by manufacturing bike frames, which would require only 0.5 hours of welding machine time per frame and yet sell for far more than the drums. Megan believes that TufStuff could sell up to 1540 bike frames per year to bike manufacturers at a price of $249 each. The accounting department has provided the following date concerning the proposed new product Selling price per frane cont per fer Direct materials Dit labor (5 per hour Manufacturing overhead Soining and administrative pene Margus per frame $100.60 32.00 30.00 220.00 $29.00 Chec 1 ETU. www manufacturing bike frames, which would require only 0.5 hours of welding machine time per trame and yet sell for far more than the drums, Megan believes that TutStuff could sell up to 1640 bike frames per year to bike manufacturers at a price of $249 each. The accounting department has provided the following data concerning the proposed new product X Y Selling price per fase $249.00 cost per Direct materials 100.0 Director (11 per hour Mansacturing overhead 38.00 Sell and Ritive pe 220.00 Hari per tre 39.00 O100 The bike frames could be produced with existing equipment and personnel Manufacturing overhead is allocated 10 products on the basis of direct labor hours. Most of the manufacturing overhead consists of fixed common costs such as rent on the factory building but some of it is variable. The variable manufacturing overhead has been estimated at $135 per WVD drum and 51.90 per bike frame The variable manufacturing overhead cost would not be incurred on drums acquired from the outside supplier Selling and administrative expenses are allocated to products on the basis of revenues. Almost all of the selling and administrative expenses are fixed common costs, but it has been estimated that variable selling and administrative expenses amount to 5.75 per WVD drum whether made or purchased and would be 5150 per bike frame. All of the company's employees-direct and indirect-wce paid for full 40.00-hour work weeks and the company has a policy of laying off workers only in major recessions As soon as your analysis was shown to the top management team at Turstuft several managers got into an argument concerning how direct labor costs should be treated when making this decision One manager argued that direct laboris always treated as a variable cost in textbooks and in practice and has always been considered a variable costat TutStuff Aher all direct means you can directly trace the cost to products it direct laboris not a variable cost what is another manager argued just as strenuously that direct labor should be considered a facostat Tur Stuff No one had been taid off in over a decade, and for all practical purposes, everyone at the plant is on a monthly salary. Everyone classified as direct labor works a regular 40.00 hour workweek and overtime has not been necessary since the company adopted Loan Production techniques. Whether the welding machine is used to make drums or frames the total payroll would be exactly the same. There is enough stack in the form of idle time, to accommodate any increase in total direct labor time that the bike frames would require Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Req 4A Reg 48 Reg 5 Req6 Reg 7A Reg 78 Compute the contribution margin per unit. (assume direct labor is a fixed cost] (Do not round intermediate calculations Round your answers to 2 decimal places.) a Purchased WVD drums b. Manufactured WD drums Manufactured bike frames Contribution Margin per unit per unit per unit Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req3 Reg 4 Reg 48 Regs Reg 6 Reg 7A Reg 78 Compute the contribution margin per welding hour. (assume direct labor is a fixed cost) (Round your intermediate calculations and final answers to 2 decimal places.) Contribution Margin 1. Manufactured WVD drums 2. Manufactured bike frames per hour per hour Complete this question by entering your answers in the tabs below. Reg 78 Reg 2 Reg 1 Req3 Req 4A Reg 5 Reg 6 Req 7A Reg 4B Determine the number of WVD drums (if any) that should be purchased and the number of WVD drums and/or bike frames (if any) that should be manufactured. Assume direct labor is a fixed cost) Purchased Manufactured WVD drums Bike frames Complete this question by entering your answers in the tabs below. Reg 78 Reg1 Reg 7A Reg 3 Reg 2 Reg 6 Reg 4 Req 48 Reg 5 What is the increase (decrease) in net operating income that would result from this plan over current operations? [Assume direct labor is a fixed cost) (Round your intermediate calculations to 2 decimal places. Round final answer to the nearest whole dollar value.) Increase (decreaso) in net operating income Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req3 Reg 4 Reg 48 Reg 5 Reg 6 Req 7A Reg 78 Compute the contribution margin per unit. (assume direct labor is a variable cost] (Do not round intermediate calculations. Round your answers to 2 decimal places.) Contribution Margin per unit Purchased WVD drums Manufactured WVD drums Manufactured bike frames per unit per unit Complete this question by entering your answers in the tabs below. Req 7A Reg 2 Reg 1 Reg 78 Req3 Reg 5 Reg 4A Req6 Reg 48 Compute the contribution margin per welding hour. (assume direct labor is a variable cost] (Round your intermediate calculations and final answers to 2 decimal places.) Manufactured WVD drums Manufactured bike frames Contribution Margin per hour per hour Complete this question by entering your answers in the tabs below. Reg 1 Rea 2 Req3 Req A Reg 48 Reqs Reg 6 Reg 78 Reg 7A Assume direct labor is a variable cost). Determine the number of WD drums (if any) that should be purchased and the number of WVD drums and/or bike frames (if any) that should be manufactured Purchased Manufactured WVD drums Bike frames Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Req 4A Req 4B Reqs Reg 6 Req 7A Reg 78 What is the increase (decrease) in net operating income that would result from this plan over current operations? [Assume direct labor is a variable cost) (Do not round Intermediate calculations.) Increase (decrease) in net operating income