need done by today please help!!
TuiStutt incorporated, sells a wide range of dtums, bins, boxes, and aihet contaness tha are used in ise chemical industy oherof the time is available annually on the machine Becouse each orum requies 0 s hoursol welaing machine lime. arnual produaton hs provided the following in ancial data concething the Wvp drums. Megan Fiote Tuistuf C ploakthon mangottinas auggeted thas the company could make betipr use of the welding machune by iceronung deportmen hes plowGed the follewing dara conceming the croposed new product The bike ftarmes coula be produced with existing equipment and per sonne. Manufacturing overhed is aliocated to products on the basis of direct labor-hours Most of the manufacturing overhead consists of fixed common costs such as remt on the factory buliding. but some of it 15 variable. The variable manufacturing overhead has been edtmated at 5135 per Wvo dicum and 51.90 per bike frame The variable manufactuting ovehead cost would nor be incurred on drums acqu red trom the outside suppller Selling and administrative expenses are allocated to products on the basis of tevenues Almost all ol the selling and acminist ative. expenses are fixed common costs, but it has been estimated that variable selling and administrative expenses amount to $75 per wVD drum whether made or purchased and would be $240 per bike frame All of the company s employees-direct and indirect-are pa d for full 40.00 .hour work we whs and the company has a policy of layng off workers only in major t ecessons As soon as yout analysis was shown to the top management team at TutStuft several managers got into an angument conceming how direct labor costs should be treated when making this decision One manager argued that direct labor is always tieated as a variable cokt in textbooks and in pructice-and has always been consdered a vanable cost at Tufsturf After all, "direct" means you can ditectly Hace the cos lo products "If diect ibor is not a variable cos, what is? Another maniager argued just as strenuousty that direct labot should be consedered a fixed cost of TutStuit No one had been lad oif in cver a decade, and for all practical purposes everyone at the plant is on a monthly sailary everyone ciass fied as diect labon woths a regular 40.00-hour workweek and overtime has not been necessaty snce the company adopted Lean Froduction techniques. Whethet the welding machine is used to make drums or frames, the iota paycoll would be exocty the same. There is enough shack in the form of icle time, to accommodate any increase in total dies abor time that the bike frames would require Plant is on a monthly salary Everyone classffed as dread been Faid off if over a decade, and for all practical purposef, everyone at the recessary since the company adocted lisen fredus dred labor wocks a regular 4000 hour workweek and oveitime hashnce beeo the total payrol would be exacty the same. Thece is technigues Whether the weldng machine is used to make drums or frames direct labor lime that the bike frames would requite Rechuired: 1 Vouid you be comtontabie ciyog on the friancial daks provided by the accounting department for making dedeanstelated fo mo WVo drums and bike trame? 2 Compute the contribution nat Git pet unit fawesme dicect labor is a foced cost] 3. Compute the contubution mat opt per whiding hout [assumte direct labor is a fixed cost] A. Aswmang direct iaborion tived cot. thet thould be mahufectured b. What is the increate (oftrewy) net operating income that would retult from this plan cver current opet ations? ind thowiobe manutowuted Comitate this pquivion toy entering your answers in the tatis beliow. rufstuff, Incorporated, sells a wide range of drums, bins, boxes, and other containers that are used in the chemical industry One of the company's products is a heavy-duty corrosion-resistant metal drum, called the WVD drum, used to store toxic wastes. Production is constrained by the capacity of an automated weiding machine that is used to make precision welds. A total of 2,220 hours of welding time is available annualiy on the machine Because each drum requires 044 hours of welding machine time, annual producton is limited to 5.550 drums At present, the welding machine is used exclusively to make the WVD drums. The accountng department hes provided the following financial data concerning the WVD drums Management believes 7,75 WVD drums could be sold each year if the company had sutficient manufacturing capacity As an aiternatve to adding another welding machine, management has considered buying additional drums from an outside supplier Hercor lndusties, Incorporated, a supplier of quality products, would be able to provide up to 4,550 WVD-type drums per year at a price of $17 per drum, which TurStulf would resell toits customers at its normal selling price after appropriate relabeling Megan Flores, TulSturts producton managet, has suggested that the company could make better use of the wolding machine by manulocturing bike frames, which would require only 05 hours of weicing machine time per frame and yet sell for far more than the drums Megan believes that TufS tuff could sell up to 1,820 bike frames per year to bike manufacturers at a price of $294 sach The awsounting depaitment has provided the followng dote concerning the proposed new product Management believes 7,175 WVD drums could be sole each yeorin the compeny had suftident manufactering capacity As an Harcor industries, incorporated, a suppler of quality products, woud be abe do fronde up to 4,50 wvD upg grums per yedr ai a Megan Flores, Tursturf's production manager, has suggested that bie sompany cou a make bent wase of the werarg machine oy manutacturing blke fremes, which would requre only 05 hours of weidng machine time bar fame and yer sel for far more than the drums Megan belleves that Turstuff could sell up to 1,820 bike fram-s pet xear to bike many faglurers of obice ors 994 gach The accounting depertment has provided the followng data csocernng the propossd new produet All of the compary's empoyec-fireci and inglect-asfpald for fal 4000 -hour work weeks and me cormpany has a pohicy of laying off workers only in major recessons As soon as your analysis wes shown to the top manogernent team at Tuss thit sevel ol manalaers got into an argument concerning varioble cost in textbooks and in practice and has aways peen conside a a vandbie costar Tulsturf Athe all "ar ecth means you purposes, everyone at the plantis on a monthly salary Eveyone clas flied as d fet labor works a recular a0oohour workweek and ony incresse in bote diect inbor pine that the bike frames woud recure Required: WVD drums and bike trones? 4. Assuming ditect laboris a tives cost biat should be morulaturid b. What is the increase (decreaseh in net of piating incorne that would resuit thom in plan over current opecatons? 5. Compute the contithetan mazgin per unit (assume drectlabor is a variable cost 6 compule ine comtibunon margin per weling hour (assume direct labor is a varisble cost) 7. Asturning diect abor is a vanable host. a Deterrmine the number ar WVO drums of ary) that should be purchosed and the number of WVD drums andjor bke trames uf ary? that should be monufoctured b. What is the increase (decrease) in mid aperating ancome that would result from this plan ovor current operations
