The Charlotte Corporation manufactures filing cabinets in two operations: machining and finishing. It provides the following information: (Click the icon to view the department information.) Each cabinet sells for $65 and has direct material costs of $30 incurred at the start of the machining operation. Charlotte has no other variable costs. Charlotte can sell whatever output it produces. The following requirements refer only to the preceding data. There is no connection between the requirements. Read the requirements. Requirement 1. Charlotte is considering using some modern jigs and tools in the finishing operation that would increase annual finishing output by 1,500 units. The annual cost of these jigs and tools is $25,000. Should Charlotte acquire these tools? Show your calculations. Producing 1,500 more units will generate contribution (throughput) margin and operating income because Select the formula, then enter the amounts to calculate the change in throughput contribution. Change in throughput contribution Should Charlotte acquire these tools? The in throughput contribution margin is Therefore, Charlotte implement the new design. the incremental costs by Requirement 2. The production manager of the Machining Department has submitted a proposal to do faster setups that would increase the annual capacity of the Machining Department by 13,000 units and would cost $38,000 per year. Should Charlotte implement the change? Show your calculations. Increasing its capacity further increase contribution (throughput) margin. Charlotte implement the change to increase production Requirement 3. An outside contractor offers to do the finishing operation for 14,000 units at $24 per unit, double the $12 per unit that it costs Charlotte to do the finishing in-house. Should Charlotte accept the subcontractor's offer? Show your calculations. Select the formula you will use to calculate the change in throughput contribution. Then, enter the amounts in the formula and calculate the change in throughput contribution. Change in throughput contribution Charlotte in throughput contribution is contract with an outside contractor to do 14,000 units of finishing at $24 per unit because the incremental costs by Requirement 4. The Hamilton Corporation offers to machine 7,000 units at $7 per unit, half the $14 per unit that it costs Charlotte to do the machining in-house. Should Charlotte accept Hamilton's offer? Show your calculations. Operating costs in the Machining Department of $2,660,000, or $14 per unit, are accept Hamilton's order. costs. Charlotte save any of these costs by subcontracting machining 7,000 units to Hamilton. Total costs will be greater by Charlotte Requirement 5. Charlotte produces 3,200 defective units at the machining operation. What is the cost to Charlotte of the defective items produced? Explain your answer briefly. The cost of 3,200 defective units at the machining operation is Because the Machining Department has a capacity of 220,000 units, it production to the Finishing Department. Therefore, there Machining Department. produce and transfer the annual opportunity cost of producing defective units in the Requirement 6. Charlotte produces 3,200 defective units at the finishing operation. What is the cost to Charlotte of the defective items produced? Explain your answer briefly. The cost of 3,200 defective units in the Finishing Department is Data Table Annual capacity Annual production Fixed operating costs (excluding direct materials) Fixed operating costs per unit produced ($2,660,000+190,000; $2,280,000 190,000) Print Done Because the Finishing Department a bottleneck operation, the cost of a defective unit is because of the of contribution margin. Choose from any list or enter any number in the input fields and then continue to the next question. Machining Finishing 220,000 units 190,000 units $2,660,000 190,000 units 190,000 units $2,280,000 $14 per unit $12 per unit