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The Vegas Corporation manufactures filing cabinets in two operations: machining and finishing. It provides the following information: B (Click the icon to view the department
The Vegas Corporation manufactures filing cabinets in two operations: machining and finishing. It provides the following information: B (Click the icon to view the department information.) Each cabinet sells for $70 and has direct material costs of $25 incurred at the start of the machining operation. Vegas has no other variable costs. Vegas can sell whatever output it produces. The following requirements refer only to the preceding data. There is no connection between the requirements. Data Table Machining Finishing 190,000 units 165,000 units 165,000 units 165,000 units Annual capacity Annual production Fixed operating costs (excluding direct materials) Fixed operating costs per unit produced ($2,310,000/165,000; $1,815,000/165,000) $2,310,000 $14 per unit $1,815,000 $11 per unit Requirement 1. Vegas is considering using some modern jigs and tools in the finishing operation that would increase annual finishing output by 1,250 units. The annual cost of these jigs and tools is $25,000. Should Vegas acquire these tools? Show your calculations. Producing 1,250 more units will generate contribution (throughput) margin and operating income because
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