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Situation: The Pennsylvania Engine Company manufactures the identical small engine at two Pennsy plants, an older plant in Pottsville and a new plant in Harrisburg.

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Situation: The Pennsylvania Engine Company manufactures the identical small engine at two Pennsy plants, an older plant in Pottsville and a new plant in Harrisburg. Information for eac plants for the current year is summarized below Pottsville Harrisburg $155.00 S155.00 Selling price per engine Variable manufacturing cost per engine Fixed manufacturing cost per engine Variable marketing & distribution cost per engine Fixed marketing & distribution cost per engine Normal annual capacity (in engines) Annual capacity with Overtime (in engines) 91.00 15.00 16.00 13.00 76,800 99,200 75.00 30.00 15.00 16.00 96,000 124,000 The above fixed and variable costs per engine are calculated based upon each plant operating at the normal annual capacity. Annual fixed costs at each plant remain constant as activity levels change and can only be eliminated through the complete shutdown of the plant. When the Pottsville plant operates above normal annual capacity, overtime costs increases manufacturing cost by $5.00 and variable marketing & distribution cost by $2.00 for each additional engine produced. When the Harrisburg plant operates above normal annual capacity, overtime costs increases the variable manufacturing cost by $7.00 and variable marketing & distribution cost by $4.00 for each additional engine produced. the variable Required: Calculate the contribution margin per engine at normal capacity and on overtime for the Pottsville and Harrisburg plants, individually. (1 point) Calculate total annual fixed costs for the Pottsville and Harrisburg plants, individually; then calculate the annual breakeven point in engines for each plant. (1 point) The Pennsylvania Engine Company is currently under contract to produce and sell 155,000 engines this year. How should the production be allocated between the Pottsville and Harrisburg plants to maximize the operating income of Pennsylvania Engine Company? Calculate Pennsylvania Engine Company's total operating income for the year under your proposed production allocation. (I point) pport your answers with appropriate, well documented analysis

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