Chenango Industries uses 12 units of part JR63 each month in the production of radar equipment. The cost of manufacturing one unit of JR63 is the following: Material handling represents the direct variable costs of the Recelving Department that are applied to direct materials and purchased components on the basis of their cost. This is a separate charge in addition to manufacturing overhead. Chenango Industries' annual manufacturing overhead budget is one-third variable and two-thirds fixed. Scott Supply, one of chenango Industres reliable vendors, has offered to supply part number JR63 at a unit price of $64,000. Required: 1. If Chenango Industries purchases the JR63 units from Scott, the capacity Chenango industries used to manufacture these parts would be idle. Should Chenango industries decide to purchase the parts from Scott, the unit cost of JR63 would increase (or decrease) by what amount? 2. Assume Chenango Industries is able to rent out alf its idle capacity for $94,000 per month. If Chenango Industries decides to purchase the 12 units from Scott Supply. Chenango's monthly cost for JR6s would increase (or decrease) by whatiamolint? 3. Assume that Chenango industries does not wish to commit to a rental agreement but could ufe th idle copacity to manufacture another product that would contribute $178.000 per month. If Chenango's management elects to manufacture JP63 in order to maintain quality control. what is the net amount of Chenango's cost from using the space to manufocture part If63? Zytel Corporation produces cleaning compounds and solutions for industrial and househoid use. While most of its products are processed independently, a few are related. Grit 337 , a coarse cleaning powder with many industrial uses, costs $2.80 a pound to make and sells for $4.00 a pound. A small portion of the annual production of this product is retained for further processing in the Mixing Department, where it is combined with several other ingredients to form a paste, which is marketed as a silver polish selling for $6.00 per jar. This further processing requires 1/4 pound of Git 337 per jar. Costs of other ingredients, labor, and variable overhead associated with this further processing amount to $2.40 per jar. Variable selling costs are $040 per jar. If the decision were made to cease production of the silver polish. $8,100 of Mixing Department foxed costs could be avoided. Zytel has limited production capacity for Grit 337, but unlimited demand for the cleaning powder. Required: Calculate the minimum number of jars of silver polish that would have to be sold to justify further processing of Git 337 . (Round your intermediate calculations to 2 decimal places ond final answer to the nearest whole number.)
