The Chicago 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 $115 and has direct material costs of $80 incurred at the start of the machining operation. Chicago has no other variable costs. Chicago 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. Chicago is considering using some modern jigs and tools in the finishing operation that would increase annual finishing output by 1,450 units. The annual cost of these jigs and tools is $45,000. Should Chicago acquire these tools? Show your calculations. Producing 1,450 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 Chicago acquire these tools? The the incremental costs by in throughput contribution margin is implement the new design. Therefore, Chicago 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 11,500 units and would cost $28,000 per year. Should Chicago implement the change? Show your calculations. Increasing its capacity further increase contribution throughput) margin. Chicago V implement the change to increase production. Requirement 3. An outside contractor offers to do the finishing operation for 12,000 units at $6 per unit, triple the $2 per unit that it costs Chicago to do the finishing in-house. Should Chicago accept the subcontractor's offer? Show your calculations. - Data table 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 Machining 150,000 units 125,000 units $500,000 Finishing 125,000 units 125,000 units Chicago Annual capacity Annual production Fixed operating costs (excluding direct materials) Fixed operating costs per unit produced ($500,000 = 125,000; $250,000 = 125,000) contract with an outside contractor to do 12,000 units of finishing at $6 per unit because the in throughput contribution is incremental costs by $250.000 $4 per unit $2 per unit Requirement 4. The Hamilton Corporation offers to machine 5,600 units at $2 unit, half the $4 per unit that it costs Chicago to do the machining in-house. Should Chicago accept Hamilton's offer? Show your calculations. The Chicago 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 $115 and has direct material costs of $80 incurred at the start of the machining operation. Chicago has no other variable costs. Chicago 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 Increasing its capacity further V increase contribution (throughput) margin. Chicago implement the change to increase production. Requirement 3. An outside contractor offers to do the finishing operation for 12,000 units at $6 per unit, triple the $2 per unit that it costs Chicago to do the finishing in-house. Should Chicago 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. Requirements Change in throughput contribution Chicago contract with an outside contractor to do 12,000 units of finishing at $6 per unit because the in throughput contribution is incremental costs by Requirement 4. The Hamilton Corporation offers to machine 5,600 units at $2 per unit, half the $4 per unit that it costs Chicago to do the machining in-house. Should Chicago accept Hamilton's offer? Show your calculations. are Operating costs in the Machining Department of $500,000, $4 per costs. Chicago save any of these costs by subcontracting machining 5,600 units to Hamilton. Total costs will be greater by Chicago accept Hamilton's order. 1. Chicago is considering using some modern jigs and tools in the finishing operation that would increase annual finishing output by 1,450 units. The annual cost of these jigs and tools is $45,000. Should Chicago acquire these tools? Show your calculations. 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 11,500 units and would cost $28,000 per year. Should Chicago implement the change? Show your calculations 3. An outside contractor offers to do the finishing operation for 12,000 units at $6 per unit, triple the $2 per unit that it costs Chicago to do the finishing in-house. Should Chicago accept the subcontractor's offer? Show your calculations. 4. The Hamilton Corporation offers to machine 5.600 units at $2 per unit, half the $4 per unit that it costs Chicago to do the machining in-house. Should Chicago accept Hamilton's offer? Show your calculations. 5. Chicago produces 2.600 defective units at the machining operation. What is the cost to Chicago of the defective items produced? Explain your answer briefly 6. Chicago produces 2,600 defective units at the finishing operation. What is the cost to Chicago of the defective items produced? Explain your answer briefly. Requirement 5. Chicago produces 2,600 defective units at the machining operation. What is the cost to Chicago of the defective items produced? Explain your answer briefly. The cost of 2,600 defective units at the machining operation is Because the Machining Department has a capacity of 150,000 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. Chicago produces 2,600 defective units at the finishing operation. What is the cost to Chicago of the defective items produced? Explain your answer briefly. The cost of 2,600 defective units in the Finishing Department is Print Done Because the Finishing Department va bottleneck operation, the cost of a defective unit is because of the contribution margin