YS-1. Business Decision Case Marvin Corporation manufactures both an automatic and a at 80% ble. At household dehumidifier. Because of limited demand, for several years production has been of estimated capacity, which is thought to be limited by the number of machine hours availa current operation levels, a profit analysis for each product line shows the following Per-unit Data Manual Automatic $350 $150 Sales price Production costs: $65 35 68 50 $32 25 16 Direct material. Direct labor $218 52 30 $300 $50 $ 91 21 13 $125 $25 Operating income. Management wants to make use of the company's current excess capacity by increasing production. ach unit of the automatic model requires 2.5 machine hours; the manual model requires 1 machine hour per unit. Required Present answers for the following questions in each independent situation: a. Assume that sufficient units of either product can be sold at current prices to utilize existing capacity fully and that fixed costs will not be affected. I. To which product should the excess capacity be devoted if the decision basis is maximi zation of contribution margin per unit of product? 2. Prepare an analysis showing which product line should be emphasized if the firm's net income is the decision basis What general decision guideline applies in this situation? Suppose the excess capacity represents 10,000 machine hours, which can be used to make 4,000 automatic units or 10,000 manual units or any proportionate combination. The onl market available for these extra units is a foreign market in which the sales prices must be reduced by 20% and in which no more than 6,000 units of either model can be sold. All costs will remain the same except that the sales commission of 10% (included in the variable operating expenses) will be avoided. Prepare an analysis showing which product should be emphasized and the effect on the firm's net income. Assume that the excess capacity can be used as indicated in requirement (b) and that the firm's market research department believes that the production available from using the ex cess capacity exclusively on either model can be sold in the domestic market at regular prices if a promotion campaign costing $225,000 is undertaken for the automatic model or $235,000 for the manual model. Prepare an analysis indicating for which product the campaign should be undertaken. 3. b. c