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Waterway Inc. manufactures two electronic products, widgets and gadgets, and has a capacity of 2,300 machine hours. Prices and costs for each product are as
Waterway Inc. manufactures two electronic products, widgets and gadgets, and has a capacity of 2,300 machine hours. Prices and costs for each product are as follows: Widget Gadget $263 $343 Selling price per unit Variable costs per unit Direct materials Other direct costs Variable Manufacturing overhead costs 37 48 17 25 43 57 Variable manufacturing overhead costs are applied at a rate of $53 per machine hour Cinrich Industries, a potential client, has offered $263 per unit to Waterway for 263 special units. These 263 units would incur the following production costs and time: Direct materials $9,123 Other direct costs $4,300 Machine hours 238 Assume that Waterway is currently operating at full capacity. Calculate the contribution margin per unit and per machine hour. (Round machine hours to 2 decimal places, eg. 12.25 and final answers to decimal places, eg, 125.) Widget Gadget New Order 166 CM per unit $ 213 $ 263 CM per machine hour S Determine whether Waterway should produce the units for the special order instead of widget or gadgetunits. Waterway produce the units for the special order instead of widget or gadget units. should not should Assume that Waterway is actually operating at 95% of full capacity. Calculate what the opportunity cost would be if Cinrich's special order were accepted. Opportunity cost Assume that Waterway is actually operating at 95% of full capacity, and additional machines can be rented at a cost of $36,300 to produce Cinrich's special order. If the special order is accepted calculate its effect on Waterway's profit. Net profit from doing twe special order
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