he unit selling price will increase by 5%. Direct lahour rates will increase b anagement is currently considering the replacement of the company's old machine with million. The new machine is expected to last five years and to have a salvag va of $75000. By using management expects to cut variable direct labour to three hours per unin, and sales are expc new one that would leeo units and remain at that level, but the company will have to hire an operator for the machines income taxes.) nine whether or not the company should purchase the new machine Increase in profn. $11 310,000 adapted from CMA Canada, now CPA Canada) T&G Co. manufactures three types of computer desks. The income statement for the three products and the (S0 6.7) le company is shown below: Cakculate contelbutinn TArgn and prepare Product A Product B Total $275.000 190,000 68,000 258,000 Product C Variable costs Fixed costs Total costs Operating income or elimination of 60,000 28,000 68.000 90,000 20,000 110,000 product and special order. 57.000$15,000 (5000)$17.000 S The company produces 1,000 units of each product. The company's capacity is 17,000 machine hours. The machtne bours for each product are seven hours for Product A, five hours for Product B, and five hours for Product C- are allocated based on machine hours. Instructions Answer the following questions: (a) If the current production levels are maintained, should the company eliminate Product C? Explain your reasoning, b) If the company can sell unlimited quantities of any of the three products, which product should be produced? (c) Suppose the company can sell unlimited quantities of any of the three products. If a customer wanted to purchase (e) si25 500 units of Product C, what would the minimum sale price per unit be for this order? demand for a single product is limited to 1,500 units. How many units of each product should the company manufac ture to maximize its total contribution margin including the contract? (d) The company has a contract that requires it to supply 500 units of each product to a customer. The total market (d) produce (adapted from CGA-Canada, now CPA Canada)