Wiliams Products inc manutactures and sells a number of items, including school knapsacks. The company has been experiencing losses on the knapsacks for some time, as shown by the contribution format income statement below Allocated on the basis of machine hours t Allocated on the basis of sales dollars. Discontinuing the knapsacks would not affect sales of other product lines and would have no noticeable effect on the company's total generai lactory overhead or total purchasing department expenses. Required: 0. Compute the increase or decrease of net operating income it the Willams Products inc ine is continued or discontinued. (Input all amounts as positive except Decreases in Soles, Decreases in Contrlbutlon Margin, and Net Losses which should be Indicated by a minus sign.) "Allocated on the basis of machine-hours. tAllocatedonthebasisofsalesdollars Discontinuing the knapsacks would not affect sales of other product lines and would have no noticeable effect on the company's total general factory overhead or total purchasing department expenses. Required: a. Compute the increase or decrease of net operating income If the Williams. Products inc line is continued or discontinued. (Input all amounts as positive except Decreases In Sales, Decreases In Contrlbution Morgin, and Net Losses which should be Indlcated by a minus slgn.) b. Would you recommend that the Willams Products inc line be discontinued? Yes Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 60,000 units per year 15 : The normal selling price is $21 per unit. The company's capacity is 75,000 units per year. An order has been received from a mall-order house for 15,000 units at a special price of $14.00 per unit. This order would not affect regular sales. Required: 1. If the order is accepted, by how much will annual profits be increased or decreased? (The order will not change the company's total fixed costs.) 2. Assume the company has 1,000 units of this product left over from last year that are inferior to the current model. The units must be sold through regular channels at reduced prices. What unit cost is relevant for establishing a mintmum selling price for these units? (Round your answer to 2 decimal places.) Ovation Company has a single product called a Bit. The company normally produces and sells 26,400 Bits each year at a selling price of $31 per unit. The company's unit costs at this level of activity are given below: A number of questions relating to the production and sale of Bits follow. Each question is independent. Requlrect: 1. Assume that Ovation Company has sufficlent capacity to produce 39,600 Bits each year without any increase in fixed manufacturing overhead costs. The company could increase its sales by 25% above the current 26,400 units each yeat if it were wiling to increase the fired selling expenses by $57,000 a. Calculate the incremental net operating income. b. Would the increased fixed selling expenses be justified? Yes No 2. Assume again that Ovation Company has sufficient capacity to produce 39,600 Bits each year A customer in a foreign market wants to purchase 6.600 Bits import dutles on the Bits would be $1.70 per unit, and costs for permits 5 and licences would be $2.970. Both import duties and permits and licenses wili be paid by Ovation. The only selling costs that would be associated with the order are $240 per unit shipping cost. Compute the per unit break-even price on this order. (Do not round your intermedlate caiculations. Round your answer to 2 decimal places.) 3. The company has 1,000 Bits on hand that have some Irregularities and are therefore considered to be "seconds. "Due to the irregularties, it will be impossible to sell these units at the normal price through regular distribution channels. What unit cost figure is relevant for setting a minimum selling price? (Round your answer to 2 decimal places.) 4. Due to a strike in its supplier's plant, Ovation Company is unable to purchase more material for the production of Bits. The strike is expected to last for two months. Ovation Company has enough materlal on hand to operate at 30% of normal levels for the two-month period. As an alternative, Ovation could close its plant down entirely for the two months. If the plant were closed, fixed manufacturing overhead costs would continue at 60% of their normal level during the two-month period and the fixed selling expenses would be reduced by 20%. What would be the impact on profits of closing the plant for the two-month perlod? (input the amount as a positive value. Do not round your intermedlate calculations.) 5. An outside manufacturer has offered to produce Bits and ship them directly to Ovation's customers. If Ovation Company accepts this offer, the facilites that it uses to produce Bits would be idle; however, fixed manufacturing overhead costs would be reduced by 75%. Since the outside manufacturer would pay for all shipping costs, the variable selling expenses would be only two-thirds of their current amount. Compute the unit cost that is relevant for comparison to the price quoted by the outside manufacturer. (Do not round your intermedlate calculatlons. Round your answer to 2 decimal places.) "That old equipment for producing oll drums is worn out," said Bili Seebach, president of Hondrich Company. "We need to make a decision quickly." The company is trying to decide whether it should rent new equipment and continue to make its oll drums internally or whether it should discontinue production and purchase them from an outside suppiler. The alternatives follow Alrernative t: Rent new equipment for producing the of drums for $150,000 per year. Alternative 2: Purchase oll drums from an outside supplier for $17.80 each. Hondich Company's costs per unit of producing the oll drums internally (with the old equipment) are given below. These costs are based on a current activity level of 30,000 units per year: The new equipment would be more efficient and, according to the manufacturer, would reduce direct labour costs and variable overhead costs by 25%. Supervision cost ( $75,000 per year) and direct materlals cost per unit would not be affected by the new equipment. The new equipment's capacity would be 60,000 oll drums per year. The total general company overhead would be unaffected by this decision. Requlrect: 1. Seebach is unsure what the company should do and would like an analysis showing the unit costs and total costs for each of the two alternatives given above. Assume that 30,000 oll drums are needed each year. a. What will be the total relevant cost of 30,000 subassemblles if they are manufactured internally as compared to being purchased? b. What would be the per unit cost of the each subassembly manufactured internally? (Do not round intermedlate calculations. Round your answer to 2 decimal places.) c. Which course of action would you recommend to the president? Manufacture internally Indifferent between the two alternatives Purchase from the outside supplier 2. Seebach is unsure what the company should do and would like an analysis showing the unit costs and total costs for each of the two alternatives given above. 0-1. What will be the total relevant cost of 50,000 subassemblies if they are manufactured internally? a.2. What would be the per unit cost of subassembly manufactured internally? (Do not round intermedlate calculations. Round your answer to 2 decimal places.) a.3. Which course of action would you recommend if 50.000 assemblies are needed each year? Manufacture internally Purchase from the outside supplier Indifferent between the two alternatives b-1. What will be the total relevant cost of 60,000 subassemblies if they are manufactured internally? b.1. What will be the total relevant cost of 60,000 subassemblles if they are manufactured internally? b.2. What would be the per unit cost of subassembly manufactured internally? (Do not round Intermediate calculatlons. Round you answer to 2 decimal places.) b.3. Which course of action would you recommend if 60.000 assemblies are needed each year? Indifferent between the two altematives Purchase from the outside supplier Manufacture internally 3. This part of the question is not part of your Connect assignment