Problem 6 (Theory of Constraints, Throughput Contribution, Relevant Costs) The Zashi Corporation manufactures filing cabinets in two operations machining and finishing. It provides the following information. Machining 100,000 units 80,000 units Finishing 80,000 units 80,000 units Annual capacity Annual production Fixed operating costs (excluding direct materials) Fixed operating costs per unit produced (P6,400,000 ÷ 80,000; P4,000,000 ÷ 80,000) P6,400,000 P4,000,000 P80 per unit P50 per unit Each cabinet sells for P720 and has direct materials costs of P320 incurred at the start of the machining operation. Zashi has no other variable costs. Zashi can sell whatever output it produces. The following requirements refer only to the preceding data. There is no connection between the requirements. Required: 1. Zashi is considering using some modern jigs and tools in the finishing operation that would increase annual finishing output by 1,000 units. The annual cost of these jigs and tool is P300,000. Should Zashi acquire these tools? Show your calculations. 2. The production manager of the Machining Department has submitted a proposal to do faster setups that would increase the annual capacity of the Machining Department by 10,000 units and cost P50,000 per year. Should Zashi implement the change? Show your calculations.

Subject :- Accounting

3 ! 3 of 10 Required information [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $240 and $162, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 131,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Direct materials Direct labor Variable manufacturing overhead Book Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses -int Total cost per unit ences Alpha Beta $ 35 $ 15 48 23 27 25 35 38 32 28 35 30 $ 212 $ 159 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 4. Assume that Cane expects to produce and sell 110,000 Betas during the current year. One of Cane's sales…

! Required information [The following information applies to the questions displayed below.] A company produces two products. Product 1 sells for $140 and Product 2 sells for $100. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 106,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Product Product 1 2 Direct materials $ 32 $ 16 Direct labor 24 19 Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses 10 20 22 16 12 19 14 Total cost per unit $121 $ 92 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. Consider each of the following questions separately. 3. Assume the company normally produces and sells 94,000 unit of Product 2 per year. What is the…

Required Information The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $225 and $175, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 130,000 units of each product Its average cost per unit for each product at this level of activity are given below. Beta $24 32 Direct materials Direct labor Variable manufacturing overhead Traceable fFixed manufacturing overhead Variable selling expenses Common fixed expenses %2442 42 34 31. Total cost per unit $173 607$ The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. Assume that Cane normally produces and sells 59,000 Betas per year. What is the financial advantage (disadvantage) of iscontinuing the Beta product line? o search 近

! Required information [The following information applies to the questions displayed below.] Martinez Company's relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense Average Cost Per Unit $ 6.30 $ 3.80 $ 1.50 $ 4.00 $ 3.30 $ 2.00 Contribution margin per unit $ 1.00 $ 0.50 13. If the selling price is $22.30 per unit, what is the contribution margin per unit? (Do not round intermediate calculations. Round your answer to 2 decimal places.)