Molina Precision Tools makes cutting tools for metalworking operations. It makes two types of tools: A6, a regular cutting tool, and EX4, a high-precision cutting tool. A6 is manufactured on a regular machine, but EX4 must be manufactured on both the regular machine and a high-precision machine. The following information is available: (Click to view the information.) Read the requirements. Requirement 1. What product mix - that is, how manyy units of A6 and EX4 - will maximize Molina's operating income? Show your calculations. (Enter an amount in each input cell including zero balances.) Begin by calculating the benefit from only selling A6 or EX4. Requirements What product mix - that is, how many units of 46 and Ex4 - will maximize Molina's operating income? Show your calculations. Suppose Molina can increase the annual capacity of its regular machines by 17,000 machine - hours at a cost of $136,000. Should Molina increase the capacity of the regular machines by 17,000 machine hours? By how much will Molina's operating income increase or decrease? Show your calculations. ? . ivivase vi veciedse? snow your calculations. 67, 00se that the capacity of the regular machines has been increased to 25,000 hours. Molina has been approached by Delaney Corporation to supply 25,000 units of another cutting tool, V2, for $130 per unit. Molina must either accept the order for all 25,000 units or reject it totally. V2 is exactly like A6 except that its variable manufacturing cost is $90 per unit. (It takes 1 hour to produce one unit of V2 on the regular machine, and variable marketing cost equals $5 per unit.) What product mix should Molina choose to maximize operating income? Show your calculations. Additional information includes the following: a. Molina faces a capacity constraint on the regular machine of 50,000 hours per year. b. The capacity of the high-precision machine is not a constraint. c. Of the $550,000 budgeted fixed overhead costs of EX4, $375,000 are lease payments for the high-precision machine. This cost is charged entirely to EX4 because Molina uses the machine exclusively to produce EX4. The company can cancel the lease agreement for the high-precision machine at any time without penalties. d. All other overhead costs are fixed and cannot be changed. \table[[,A6, EX4,], [Selling price,$, 95$ ,145], [Variable manufacturing cost per unit,$, 80$, 120], [Variable marketing cost per unit,$, 5$, 10], [Budgeted total fixed overhead costs, $, $1.0, 550,000], [Hours required to produce one unit on the regular machine, $,300,000$, 0.5]]

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Molina Precision Tools makes cutting tools for metalworking operations. It makes two types of tools: A6, a regular cutting
tool, and EX4, a high-precision cutting tool. A6 is manufactured on a regular machine, but EX4 must be manufactured
on both the regular machine and a high-precision machine. The following information is available: (Click to view the
information.) Read the requirements. Requirement 1. What product mix - that is, how manyy units of A6 and EX4 - will
maximize Molina's operating income? Show your calculations. (Enter an amount in each input cell including zero
balances.) Begin by calculating the benefit from only selling A6 or EX4. Requirements What product mix - that is, how
many units of 46 and Ex4 - will maximize Molina's operating income? Show your calculations. Suppose Molina can
increase the annual capacity of its regular machines by 17,000 machine - hours at a cost of $136,000. Should Molina
increase the capacity of the regular machines by 17,000 machine hours? By how much will Molina's operating income
increase or decrease? Show your calculations. ? .
ivivase vi veciedse? snow your calculations. 67, 00se that the
capacity of the regular machines has been increased to 25,000 hours. Molina has been approached by Delaney
Corporation to supply 25,000 units of another cutting tool, V2, for $130 per unit. Molina must either accept the order for
all 25,000 units or reject it totally. V2 is exactly like A6 except that its variable manufacturing cost is $90 per unit. (It takes
1 hour to produce one unit of V2 on the regular machine, and variable marketing cost equals $5 per unit.) What product
mix should Molina choose to maximize operating income? Show your calculations. Additional information includes the
following: a. Molina faces a capacity constraint on the regular machine of 50,000 hours per year. b. The capacity of the
high-precision machine is not a constraint. c. Of the $550,000 budgeted fixed overhead costs of EX4, $375,000 are
lease payments for the high-precision machine. This cost is charged entirely to EX4 because Molina uses the machine
exclusively to produce EX4. The company can cancel the lease agreement for the high-precision machine at any time
without penalties. d. All other overhead costs are fixed and cannot be changed. \table[[,A6, EX4,], [Selling price,$, 95$
,145], [Variable manufacturing cost per unit,$, 80$, 120], [Variable marketing cost per unit,$, 5$, 10], [Budgeted total fixed
overhead costs, $, $1.0, 550,000], [Hours required to produce one unit on the regular machine, $,300,000$, 0.5]]
Transcribed Image Text:Molina Precision Tools makes cutting tools for metalworking operations. It makes two types of tools: A6, a regular cutting tool, and EX4, a high-precision cutting tool. A6 is manufactured on a regular machine, but EX4 must be manufactured on both the regular machine and a high-precision machine. The following information is available: (Click to view the information.) Read the requirements. Requirement 1. What product mix - that is, how manyy units of A6 and EX4 - will maximize Molina's operating income? Show your calculations. (Enter an amount in each input cell including zero balances.) Begin by calculating the benefit from only selling A6 or EX4. Requirements What product mix - that is, how many units of 46 and Ex4 - will maximize Molina's operating income? Show your calculations. Suppose Molina can increase the annual capacity of its regular machines by 17,000 machine - hours at a cost of $136,000. Should Molina increase the capacity of the regular machines by 17,000 machine hours? By how much will Molina's operating income increase or decrease? Show your calculations. ? . ivivase vi veciedse? snow your calculations. 67, 00se that the capacity of the regular machines has been increased to 25,000 hours. Molina has been approached by Delaney Corporation to supply 25,000 units of another cutting tool, V2, for $130 per unit. Molina must either accept the order for all 25,000 units or reject it totally. V2 is exactly like A6 except that its variable manufacturing cost is $90 per unit. (It takes 1 hour to produce one unit of V2 on the regular machine, and variable marketing cost equals $5 per unit.) What product mix should Molina choose to maximize operating income? Show your calculations. Additional information includes the following: a. Molina faces a capacity constraint on the regular machine of 50,000 hours per year. b. The capacity of the high-precision machine is not a constraint. c. Of the $550,000 budgeted fixed overhead costs of EX4, $375,000 are lease payments for the high-precision machine. This cost is charged entirely to EX4 because Molina uses the machine exclusively to produce EX4. The company can cancel the lease agreement for the high-precision machine at any time without penalties. d. All other overhead costs are fixed and cannot be changed. \table[[,A6, EX4,], [Selling price,$, 95$ ,145], [Variable manufacturing cost per unit,$, 80$, 120], [Variable marketing cost per unit,$, 5$, 10], [Budgeted total fixed overhead costs, $, $1.0, 550,000], [Hours required to produce one unit on the regular machine, $,300,000$, 0.5]]
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