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AutoSave O OFF A A . G ... Test 2 802 Home Insert Draw Page Layout Formulas Data Review View Tell me Share Comments Calibri (Body) v 11 AA = ab Wrap Text v General Insert Ex AY- O. Ex Delete v Z Paste BIUV DVAv E E Merge & Centre v ~ % " 00 0 Conditional Format Cell Sort & Find & Analyse Format v Sensitivity Formatting as Table Styles Filter Select Data K2 fx B C D E G H M N P Q Corporation A operates with machinery set A used in production of product A, and semi-annual production capacity of 90.000 units A. Machinery set B is used in production of product B and have semi-annual capacity of 50.000 units B. Future prediction est and 38.000 units Bin Ist year half, and 82.000 units A and 42.000 units Bin 2nd year half. Unit A is sold with margin of 85% and unit B is sold based on contribution margine ratio of 47%. Direct labor cost per hour is $15. We perform one 45 minutes quality control inspection for product B and 20 minutes of QC insection for product A. Machinery set B is closing down to its useful life end and we need to make an investment decison. Option 1 is to invest $1.650.000 in overhauling old technology, we may keep running equipment for another five years with one major investment in 3rd year of $960.000 and 12% of salvage value after 5th year. Increase in fixed costs would be 5%. Product A Product B Direct Material per Unit Cost $ 128,00 $ 112,00 |Direct Labor Hours per Unit 5 ,75 8,90 MOH in one year period 15.000.000,00 Fixed Expenses in one year period 19.500.000,00 For distribution of MOHC is used ABC method, and for the calculation use the folowing data: 14 Manufacturing overhead cost structure 15 Costs relating to set-ups $ 3.800.000,00 16 Costs relating to materials handling 26% 17 Costs relating to quality control Total production overhead 15.000.000,00 Consultants analysis shows that the total production overheads can be divided as follows: No. of No. of Set ups movements of No. of inspections materials Product A 215 4500 Product B 850 550 Total Market research also showed that for every 1% lower total sales price would leade to 1.68% increase in half year sales results for product A and 2.25% for product B. In the future, seling price for product A should be set on $445 and $ 610 for product B. Corporation have an options of investing $8.2 million in machinery set B that will lower the overall variable costs of product B for 12.5% and increase in fixed costs would be 14%. Increase in total production capacity B would be 5.000 units and add 2.000 units to production of product A. The salvage value after five years is 29 20% invested. Discount rate is 14% per annum. 30 31 What should be done? 32 Sheet1 + Ready Accessibility: Investigate + 88%