the metal chassis was sheared to size by a metal distributing company hour (variable). A subcontractor will mold the plastic unit, and minor additional processing will be required at Tan Toy. The raw material for State any 12. The Tan Toy Company is a medium-sized manufacturer of toys. Its en gineering department aggressively seeks product cost reductions through redesign (often referred to as value engineering). One attractive oppor- tunity is to substitute a molded plastic chassis (frame) for the present fabricated sheet-metal chassis on a particular toy. The engineering de- partment has proven the technical feasibility of the substitution and, in order to make and test prototypes, earlier acquired for $10,000 the tooling required for the molded-plastic chassis. Here are comparative full- absorption manufacturing cost data (per unit): Plastic Metal Material $0.88 $0.41 Labor 0.13 0.75 Overhead 0.18 1.07 Total $1.19 $2.23 Tooling $10,000 Fully depreciated The plastic unit requires 0.02 hour of labor, while the metal unit requires 0.12 hour. Estimated annual usage is 12,500 units. The overhead rates are $8.92 per direct labor hour (full absorption) and $2.75 per direct labor and then punched, formed, and finished at Tan. The 0.12 hour of proc- essing labor is represented by these activities: han 0.06 hour for punching 0.04 hour for forming 0.02 hour for finishing a. Should the substitution be made? b. Assume the following existing inventories (related only to the metal unit): Raw material Work-in-process Number of Units 3,000 4,200 Inventory Value $1,230 $5,544 The work-in-process units have been punched but not formed or finished. The scrap value of the metal parts is about 5 cents per unit. When should the substitution be effected? the metal chassis was sheared to size by a metal distributing company hour (variable). A subcontractor will mold the plastic unit, and minor additional processing will be required at Tan Toy. The raw material for State any 12. The Tan Toy Company is a medium-sized manufacturer of toys. Its en gineering department aggressively seeks product cost reductions through redesign (often referred to as value engineering). One attractive oppor- tunity is to substitute a molded plastic chassis (frame) for the present fabricated sheet-metal chassis on a particular toy. The engineering de- partment has proven the technical feasibility of the substitution and, in order to make and test prototypes, earlier acquired for $10,000 the tooling required for the molded-plastic chassis. Here are comparative full- absorption manufacturing cost data (per unit): Plastic Metal Material $0.88 $0.41 Labor 0.13 0.75 Overhead 0.18 1.07 Total $1.19 $2.23 Tooling $10,000 Fully depreciated The plastic unit requires 0.02 hour of labor, while the metal unit requires 0.12 hour. Estimated annual usage is 12,500 units. The overhead rates are $8.92 per direct labor hour (full absorption) and $2.75 per direct labor and then punched, formed, and finished at Tan. The 0.12 hour of proc- essing labor is represented by these activities: han 0.06 hour for punching 0.04 hour for forming 0.02 hour for finishing a. Should the substitution be made? b. Assume the following existing inventories (related only to the metal unit): Raw material Work-in-process Number of Units 3,000 4,200 Inventory Value $1,230 $5,544 The work-in-process units have been punched but not formed or finished. The scrap value of the metal parts is about 5 cents per unit. When should the substitution be effected