Part 1 Midas Touch Tools [MTT] makes cutting tools for metalworking operations. It makes two types of tools: LC115, a regular cutting tool, and C8698, a high precision cutting tool. LC115 is manufactured on a regular machine, but C8698 must be manufactured on both the regular machine and a high precision machine. The following information is available: @ Selling price 5 200 S 300 Variable manufacturing cost per unit S 120 S 200 Variable marketing cost per unit S 30 S 70 Budgeted total fixed overhead costs S 700,000 5 1,100,000 Hours required to produce one unit on the regular machine 1.0 0.5 Additional information includes the following: a. MTT faces a capacity constraint on the regular machine of 50,000 hours per year. The capacity of the highprecision machine is not a constraint. b. Of the $1,100,000 budgeted fixed overhead costs of C8698, $600,000 are lease payments for the highprecision machine. This cost is charged entirely to C8698 because MTT uses the machine exclusively to produce C8698. The company can cancel the lease agreement for the highprecision machine at any time without penalties. All other overhead costs are fixed and cannot be changed. REQUIRED: 15.. What product mixthat is, how many units of LC115 and C8698 will maximise MTT's operating income? Show your calculations. 8. Suppose MTT can increase the annual capacity of its regular machines by 15,000 machine hours at a cost of $300,000. Should MTT increase the capacity of the regular machines by 15,000 machinehours? 8y how much will MTT's operating income increase or decrease? Show your calculations. C. Suppose that the capacity ofthe regular machines has been increased to 65,000 hours. MTT has been approached by Clark Corporation to supply 20,000 units of another cutting tool, VY237, for $240 per unit. MTT must either accept the order for all 20,000 units or reject it totally. VY237 is exactly like LC115 except that its variable manufacturing cost is 5140 per unit. {It takes 1 hour to produce one unit of VY237 on the regular machine, and variable marketing cost equals 530 per unit.) What product mix should MTT choose to maximize operating income? Show your calculations