Thermal Mugs, Inc., manufactures various types of leak-proof personal drink carriers. Thermal's T6 container, its most insulated carrier, maintains the temperature of the liquid inside for 6 hours. Thermal has designed a new lid for the T6 carrier that allows for easier drinking and pouring. The cost to produce the new lid is: Direct materials $1 Direct labor $5 Avoidable fixed overhead per unit $7 Variable fixed overhead per unit 6 Plato Plastics has approached Thermal and offered to produce the 130,000 lids Thermal will require for current production levels of the T6 carrier, at a unit price of $15 each. What are the total relevant costs for Thermal Mugs? Your Answer: Answer Thermal Mugs, Inc., manufactures various types of leak-proof personal drink carriers. Thermal's T6 container, its most insulated carrier, maintains the temperature of the liquid inside for 6 hours. Thermal has designed a new lid for the T6 carrier that allows for easier drinking and pouring. The cost to produce the new lid is: Direct materials $2 Direct labor $4 Fixed overhead per unit $9 Variable fixed overhead per unit 4 Plato Plastics has approached Thermal and offered to produce the 140,000 lids Thermal will require for current production levels of the T6 carrier, at a unit price of $17 each. What are the total relevant costs to buy from Plato? Your Answer: Answer Ainsley's Apples grows and sells organic apples. Ainsley purchased a machine for $800,000 that sorts the apples by size. The largest apples are sold as loose apples to the various stores, the medium sized apples are bagged and sold to the grocers in their bagged state, and the smallest apples are sold to deep discounters or to a local manufacturing plant that processes the apples into applesauce. Ainsley is considering keeping the small apples and processing them into apple juice that would be sold under Ainsley's own label to local grocers. The following are additional details: The small apples currently sell to the deep discounters and local manufacturers for $7 per dozen. The variable cost to prepare the small apples for sale is $2 per dozen. Ainsley can sell each gallon of organic apple juice for $19 per gallon. Ainsley can sell 210,000 dozen apples if it decides not to process further. Ainsley can sell 170,000 gallons if it decides to process further. The cost to produce the organic apple juice will be $6 variable cost per gallon plus $100,000 additional fixed costs for the one-year lease of the equipment needed to make and bottle the juice. What is operating income if sold at splitoff (if sold as apples instead of becoming apple juice)