Exploiting Internal Linkages Woodruff Company is currently producing a snowmobile that uses five specialized parts. Engineering has proposed replacing these specialized parts with commodity parts, which will cost less and larger order quantities. Current activity capacity and demand (with specialized parts required) and expected activity demand (with only commodity parts required) are provided Activities Material usage Installing parts Activity Driver Activity Capacity Current Activity Expected Activity Demand Demand Number of parts 192,000 192,000 192,000 Direct labor hours 90,000 90,000 72,000 Purchasing parts Number of orders 20,000 17,100 10,500 Additionally, the following activity cost data are provided: Material usage: $20 per specialized part used; $16 per commodity part; no fixed activity cost. Installing parts: $14 per direct labor hour; no fixed activity cost. Purchasing parts: Four salaried clerks, each earning a $45,000 annual salary; each clerk is capable of processing 5,000 purchase orders. Variable activity costs: $0.80 per purchase order processe KTC. Required: 1. Calculate the cost reduction produced by using commodity parts instead of specialized parts. Enter your answers as positive amounts. Moterial usage cost reduction Labor usage cost reduction Purchasing cost reduction 768,000 252,000 50,280 v Total savings 1,070,280 v Sumors that 50.000 units are haine.roduced and and for 48.800 and that the netinkaauince What is the newnica for the confimed send 2. Suppose that 50,000 units are being produced and sold for $8,800 per unit and that the price per unit will be reduced by the per-unit savings. What is the new price for the configured product? If required, mound your intermediate calculations and final answer to the nearest cent 8,778.59 3. What if the expected activity demand for purchase orders was 1,500? How would this affect the answers to Requirements 1 and 27 If required, round your intermediate calculations and final answers to the nearest cent Total savings Increase by 46,600 to 1.116,000 New price Decrease x by to Check My Work 1. See Comerstone 11.1. Use information given to calculate cost reduction. 2. New price old price per unit (Total savings new units given) 3. Recalculate using new purchase orders activity Incorrect Next