Each cabinet sells for $72 and has direct material costs of $32 incurred at the start of the machining operation. Mayfield has no other variable costs. Mayfield can sell whatever output it produces. The following requirements refer only to the preceding data. There is no connection between the requirements.

• 1.Mayfieldisconsideringusingsomemodernjigsandtoolsinthefinishingoperationthatwouldincreaseannualfinishingoutputby1,000units.Theannualcostofthesejigsandtoolsis$30,000.ShouldMayfieldacquirethesetools?Showyourcalculations.
• 2.Theproductionmanagerofthemachiningdepartmenthassubmittedaproposaltodofastersetupsthatwouldincreasetheannualcapacityofthemachiningdepartmentby10,000unitsandwouldcost$5,000peryear.ShouldMayfieldimplementthechange?Showyourcalculations.
• 3.Anoutsidecontractorofferstodothefinishingoperationfor12,000unitsat$10perunit,doublethe$5perunitthatitcostsMayfieldtodothefinishingin-house.ShouldMayfieldacceptthesubcontractor'soffer?Showyourcalculations.
• 4. The Hunt Corporation offers to machine 4,000 units at $4 per unit, half the $8 per unit that it costs Mayfield to do the machining in-house. Should Mayfield accept Hunt ' s offer? Show your calculations.