Gargantuan Industries is a multiproduct company with several manufacturing plants. The Boise Plant manufactures and distributes two household cleaning and polishing compounds, standard and commercial, under the Super Clean label. The forecasted operating results for the first six months of the current year, when 195,000 cases of each compound are expected to be manufactured and sold, are presented in the following statement. GARGANTUAN INDUSTRIES: BOISE PLANT Forecasted Results of Operations For the Six-Month Period Ending June 30 (in thousands) Sales Cost of goods sold Gross profit Selling and administrative expenses: Variable Fixed Total selling and administrative expenses Income (loss) before taxes Standard $ 11,505.0 9,945.0 $1,560.0 $ 2,301.0 1,165.0 $ 3,466.0 $ (1,906.0) Commercial $ 19,110.0 12,967.5 $6,142.5 $ 3,471.0 1,935.0 $5,406.0 $ 736.5 Total $ 30,615.0 22,912.5 $7,702.5 $ 5,772.0 3,100.0 $8,872.0 $ (1,169.5) "The fixed selling and administrative expenses are allocated between the two products on the basis of dollar sales volume The standard compound sold for $59 a case and the commercial compound sold for $98 a case during the first six months of the year. The manufacturing costs, by case of product, are presented in the schedule below. Each product is manufactured on a separate production line. Annual normal manufacturing capacity is 390,000 cases of each product. However, the plant is capable of producing 440,000 cases of standard compound and 540,000 cases of commercial compound annually. Direct material Standard (Cost Commercial (Cost per Case) per Case) 75:50 The standard compound sold for $59 a case and the commercial compound sold for $98 a case during the first six months of the year. The manufacturing costs, by case of product, are presented in the schedule below. Each product is manufactured on a separate production line. Annual normal manufacturing capacity is 390,000 cases of each product. However, the plant is capable of producing 440,000 cases of standard compound and 540,000 cases of commercial compound annually. Standard (Cost Commercial (Cost Direct material Direct labor Variable manufacturing overhead Fixed manufacturing overhead" Total manufacturing cost Variable selling and administrative costs per Case) $ 23.50 11.80 3.90 11.80 $51.00 $ 11.80 per Case) $ 25.50 15.60 7.80 17.60 $ 66.50 $ 17.80 "Depreciation charges are 50 percent of the fixed manufacturing overhead of each line. The following schedule reflects the consensus of top management regarding the price-volume alternatives for the Super Clean products for the last six months of the current year. These are essentially the same alternatives management had during the first six months of the year Standard Compound Commercial Compound Alternative Prices Sales Volume Alternative Prices Sales Volume (per case) (in cases) (per case). $57 139,000 $ 71 59 119,000 61 109,000 63 99,000 65 69,000 FREES 73 79 83 89 (in cases) 194,000 159,000 119,000 74,000 54,000 < Prev 3 of 3 Next Gargantuan's top management believes the loss for the first six months reflects a tight profit margin caused by intense competition. Management also believes that many companies will leave this market by next year and profit should improve. Required: 1. What unit selling price should Gargantuan Industries select for each of the Super Clean compounds for the remaining six months of the year? 2-a. Independently of your answer to requirement 1, assume the optimum alternatives for the last six months were as follows: a selling price of $65 and volume of 69,000 cases for the standard compound, and a selling price of $89 and volume of 54,000 cases for the commercial compound. Calculate the contribution margin. 2-b. Given the scenario in requirement (2-a), should management consider closing down its operations until January 1 of the next year in order to minimize its losses? Complete this question by entering your answers in the tabs below. Req 11 Req 2A Req 28 What unit selling price should Gargantuan Industries select for each of the Super Clean compounds for the remaining six months of the year? Super Clean compounds Standard compound Commercial compound Selling Price per case per case Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Independently of your answer to requirement (1), assume the optimum alternatives for the last six months were as follows: a selling price of $65 and volume of 69,000 cases for the standard compound, and a selling price of $89 and volume of 54,000 cases for the commercial compound. Calculate the contribution margin. Note: Enter your answers in thousands rounded to 1 decimal place. Contribution Margin Standard Commercial Total Show less A cases for the standard compound, and a selling price of $89 and volume of 54,000 cases for the commercial compound. Calculate the contribution margin. 2-b. Given the scenario in requirement (2-a), should management consider closing down its operations until January 1 of the next year in order to minimize its losses? Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req Given the scenario in requirement (2-a), should management consider closing down its operations until January 1 of the next year in order to minimize its losses? Should management consider closing down its operations? < Req 2A