Chef Gourmet, Inc., has assembled the following data pertaining to its two most popular products.

	Blender			Food Processor
Direct material	$	24		$	28
Direct labor		17			45
Manufacturing overhead @ $58 per machine hour		58			116
Cost if purchased from an outside supplier		81			151
Annual demand (units)		40,000			49,000

Past experience has shown that the fixed manufacturing overhead component included in the cost per machine hour averages $29. Management has a policy of filling all sales orders, even if it means purchasing units from outside suppliers.

Required:

1a.	If 84,000 machine hours are available, and management desires to follow an optimal strategy, how many units of each product should the firm manufacture? How many units of each product should be purchased?

	Blender	Food Processor
Manufacture
Purchase

1b.

With all other things constant, if management is able to reduce the direct material for a food processor to $24 per unit, how many units of each product should be manufactured? Purchased?

	Blender	Food Processor
Manufacture
Purchase

The following data pertain to Pensacola Divisions most recent year of operations.

Income	$	4,350,000
Sales revenue		58,000,000
Average invested capital		20,000,000

2. Required:

Compute Pensacola Divisions sales margin, capital turnover, and return on investment for the year. (Round "Capital turnover" answer to 2 decimal places. Round your "Percentage" answers to 2 decimal places (i.e., .1234 should be entered as 12.34))

Sales margin		%
Capital turnover
Return on investment		%