Solutions pls

10.30 Product mix, special order /N. Add adapted) Pendleton Engineering makes cutting tools for metalworking operations. It makes two types of tool: R3, a regular cutting tool, and HP5, a high-precision cutting tool. R3 is manufactured on a regular machine but HP6 must be manufactured on both the regular machine and a high precision machine. The following information is available: R3 Selling price 5100 $150 Variable manufacturing cost per unit 560 $100 Variable marketing cost per unit $15 $35 Budgeted total fixed overhead costs $350 000 $550 000 Hours required to produce one unit on the regular machine 1.0 0.5 HPS Additional Information includes: a. Pendleton Engineering faces a capacity constraint on the regular machine of 50 000 hours per year. b. The capacity of the high-precision machine is not a constraint. or the $550 000 budgeted fixed overhead costs of HP6, S300 000 are lease payments for the high-precision machine. This cost is charged entirely to HP6 because Pendleton Engineering uses the machine exclusively to produce HPS. The lease agreement for the high-precision machine can be cancelled at any time without penalties. d. All other overhead costs are fixed and cannot be changed. Required 1. What product mix-that is, how many units of R3 and HP6will maximise Pendleton Engineering's operating profit? Show your calculations. 2. Suppose that Pendleton Engineering can increase the annual capacity of ks regular machines by 15 000 machine-hours at a cost of $150 000. Should Pendleton Engineering Increase the capacity of the regular machines by 15 000 machine hours? By how much wel Pendleton Engineerings operating profit increase? Show your calculations 3. Suppose that the capacity of the regular machines has been increased to 65 000 hours. Pendleton Engineering has been approached by Carter Ltd to supply 20 000 units of 20 another cutting tool. 53, for $120 per unit. Pendleton Engineering must either accept the order for all 20 000 units or reject it totally S3 is exactly like R3 except that its vanable manufacturing cost is 570 per unit (it takes 1 hour to produce one unit of 53 on the regular machine, and variable marketing cost equals 15 per unit.) What product mix should Pendleton Engineering choose to max.colse operating profit? Show your calculations