Section I Chattanooga Outdoors produces outdoor fireplaces. For the first few moedts of 2023 , the Company had the following operating resulis at 68% of operating capacity: Cost of goods sold is 807evariable and 20 th fixod. Operating expenes are rens variable and 30 wi fixed. A foreign compuny bas requested a special order to buy 4,000 fineplaces at $52 ech. If accepted, there would not be any increase in fixed coste, but there would be an increase in shipping conts of 57,000. INSTRUCTIONS: Prepare the analysis to cvaluate whether the Company should acecpe or rejoct the special ordet. Indicate what the Company should do. Sectios 2 Chatanooga Development Company has leamed that a small rubber O-ring a ave manufactuses at a cost of $1.00 per unit could be bought elsewhere for $0.82 per unit. The Company has fived costs of 50.20 per unit that connet be eliminated by buying the rubber O-ning. The Coengany produces 460.000 of these 0 -rings each year If Chattanooga Develogment Compuny decides to bey rather than prodose the rubber O-rings, it can devote machinery and labor to making a heat sensot that it currently buys from anoeter compeny. The Compuny needs 500 heat sensoes each year, and the cost to buy the heat sensoes is $12 t t6 each. The cust of muking each heat sensor would be $9,90. INSTRUCTIONS: a) For this part, use only the information in the fint puragraph and do not consider the possibelity of making the heat sensors. Prepare the analysis to evaluate whether the Conpany should buy or continue to make the rubber 0 -rings. b) Prepare a calculation of the Company's opportunity coet if it docides to buy the rubber O-rings and begin making the heat sensors. c) Prepare the analysis to evaluate whether the Compuny should buy or make the rubber O-rings assuming that the Coupany would begin making the heat sensars if it bough ehe rubber O-ringe. Indicate what the Compuny should do. Section 3 Chattanooga Development Compasy wants to evaluate replacing an older machine requiring aignificant maintenance which delays production. The older machine can be used for 2 mare years of production. The Compuny coald buy a replacement machine at a cos of $55,000 and the near machine would have a 2 -ycar life. The units produced by the machine have a sales grice of 58.50 . The older machioc prodoces an average of 50 units per day at a cost of $6.50 per unit. The new machine woald produce twice as maty units at the same cost. Sales units and prodaction enits are the same volume, and the machines are operuted for 260 drys each year. INSTRUCTLONS Prepare the analysis to evaluste whether the Company shoald retin or replace the machine. Indieate what the Company should do
