Can you compare the current contribution margin (see calculations in screenshots) to the other alternative/alternatives under consideration?

Thank you!

Short-term Decision Making with a Strategic Emphasis Knives Manufacturer Inc. Knives Manufacturer, Inc., is a wholesale distributor supplying a wide range of high-end cooking knives for the professional chef. The company has an enviable reputation for quality of its products. The demand for its products is so great that at times, Knives Manufacturer, Inc., cannot satisfy the demand and must delay or refuse some orders, in order to maintain its production quality. Additionally, Knives Manufacturer, Inc., purchases some of its products from outside suppliers in order to meet the demand. These suppliers are carefully chosen so that their products maintain the quality image that Knives Manufacturer, Inc., has attained. The Knives Manufacturer, Inc., production facilities are highly automated, with more than 100 robots performing many steps in the knife-making process. The basic shape and the integral bolster of forged blades are precision forged in a die at 2200 F (1200 C) and then hardened at 1920 F (1500 C). Knives forged by Knives Manufacturer, Inc., are produced in more than 40 steps in their manufacturing process. The company has a Robotics Department that is currently manufacturing the Pro Chef Knives for the cooking set. Knives Manufacturer, Inc., is able to manufacture and sell 150,000 knife sets annually, making full use of its robotic capacity. Presented below are the selling price and costs associated with Knives Manufacturer, Inc., Pro Chef knives: $1400 $50 300 Selling Price per Set: Cost per Set: Polypropylene handle High carbon stainless steel- forged Robotics time ($50/hr) Direct labor Manufacturing overhead Selling and admin. cost Total costs Profit per set of Pro Chef knives 150 300 150 40 990 $410 Because Knives Manufacturer, Inc., believes it could sell 200,000 sets of Pro Chef knives annually if it had sufficient manufacturing capacity, the company has investigated the possibility of purchasing more Pro Chef knives to distribute them. Bon Appetit Inc., a steady supplier of quality products, would be able to provide 30,000 sets of Pro Chef knife sets per year at a price of $1,050 per set delivered to the facility of Knives Manufacturer, Inc. With the explosion of the healthy eating and organic food phenomenon and the current open concept in housing with the kitchen as the center of the home, there is a significant uptick in the at home foodie. Knives Manufacturer's product manager has suggested that the company could make better use of its Robotics Department by manufacturing high-end cutlery for the at- home market. In fact, to support his position, the product manager has a market study that indicates an expanding market for high-end cutlery for the home market and a need for additional suppliers. The product manager believes that Knives Manufacturer, Inc., could expect to sell 75,000 sets of high-end home-market cutlery annually at a price of $500 per set. The estimated costs to manufacture Home Chef cutlery is presented below. Home Chef Cutlery data $500 Selling Price per Set: Cost per Set: Molded Plastic Carbon Steel - laser cut Robotics time ($50/hr) Direct labor Manufacturing overhead Selling and admin. cost Total costs Profit per set of Home Chef knives $25 25 100 25 75 20 270 $230 The Home Chef knife sets are laser-cut from a stainless-steel plate and have only 14 steps in their manufacturing process. Other information pertinent to Knives Manufacturer, Inc.'s operations is presented below. Purchased products - other costs: Total fixed and variable selling and administrative costs for the purchased knives would be $12 per set. Selling and Administrative costs: An allocated $8 fixed overhead cost per unit is included in the selling and administrative cost for all purchased and manufactured products. Manufacturing overhead: The overhead included in the above costs is a combined variable and fixed amount. In the Robotics Department, Knives Manufacturer, Inc., uses Robotics hours as the application base for manufacturing overhead. Included in the manufacturing overhead for the current year is $13,500,000 of fixed, factory-wide manufacturing overhead in the Robotics Department. REQUIRED: 1. Maximize Knives Manufacturer's profitability, recommending which product or products should be manufactured and/or purchased. a. Support your recommendation by an analysis that will demonstrate the associated financial impact. Compute profitability through contribution margin using a variable costing income statement. Your analysis should compare the current contribution margin to the other alternative/alternatives under consideration. Hint: This is a short-term decision. In the short run, fixed costs remain the same. The financial comparison should only include variable costs. Knife Manufacturing Business Selling price (a) 1,000 Polypropylene Handle 25 High Carbon Stainless Steel - Forged 300 Robotic Time (3 Hour) 150 Direct Labor 200 Variable Manufacturing Overhead 105 Variable Selling and Admin Overhead 32 Total Variable Cost (b) 812 Contribution Margin (c-a-b) 188 Fixed Manufacturing Overhead 45 Fixed Selling and admin cost 8 oo Net Profit 135 Contribution per Robotic Hour (c/robotic hours) 63 Evaluation of Bon Appetit Inc - Proposal Selling price (a) 1,000 Variable Cost Purchase Price 850 Variable selling and administrative cost (12-8) 4. Contribution Margin per unit 146 Evaluation of High End home Cutlery Selling price (a) 500 Variable Cost Molded Plastic 25 100 Carbon Steel - laser cut Robotics time (1 Hour) 50 Direct labor 75 Variable Manufacturing Overhead (50-45) 5 Variable Selling and Admin Overhead (20-8) 12 Total Variable Cost (b) 267 Contribution Margin (a-b) 233 Fixed Manufacturing overhead 45 Fixed Selling and admin. cost 8 Net Profit 180 Contribution Margin (a-b) 233 Fixed Manufacturing overhead 45 Fixed Selling and admin. cost 8 Net Profit 180 Contribution per Robotic Hour 180 Short-term Decision Making with a Strategic Emphasis Knives Manufacturer Inc. Knives Manufacturer, Inc., is a wholesale distributor supplying a wide range of high-end cooking knives for the professional chef. The company has an enviable reputation for quality of its products. The demand for its products is so great that at times, Knives Manufacturer, Inc., cannot satisfy the demand and must delay or refuse some orders, in order to maintain its production quality. Additionally, Knives Manufacturer, Inc., purchases some of its products from outside suppliers in order to meet the demand. These suppliers are carefully chosen so that their products maintain the quality image that Knives Manufacturer, Inc., has attained. The Knives Manufacturer, Inc., production facilities are highly automated, with more than 100 robots performing many steps in the knife-making process. The basic shape and the integral bolster of forged blades are precision forged in a die at 2200 F (1200 C) and then hardened at 1920 F (1500 C). Knives forged by Knives Manufacturer, Inc., are produced in more than 40 steps in their manufacturing process. The company has a Robotics Department that is currently manufacturing the Pro Chef Knives for the cooking set. Knives Manufacturer, Inc., is able to manufacture and sell 150,000 knife sets annually, making full use of its robotic capacity. Presented below are the selling price and costs associated with Knives Manufacturer, Inc., Pro Chef knives: $1400 $50 300 Selling Price per Set: Cost per Set: Polypropylene handle High carbon stainless steel- forged Robotics time ($50/hr) Direct labor Manufacturing overhead Selling and admin. cost Total costs Profit per set of Pro Chef knives 150 300 150 40 990 $410 Because Knives Manufacturer, Inc., believes it could sell 200,000 sets of Pro Chef knives annually if it had sufficient manufacturing capacity, the company has investigated the possibility of purchasing more Pro Chef knives to distribute them. Bon Appetit Inc., a steady supplier of quality products, would be able to provide 30,000 sets of Pro Chef knife sets per year at a price of $1,050 per set delivered to the facility of Knives Manufacturer, Inc. With the explosion of the healthy eating and organic food phenomenon and the current open concept in housing with the kitchen as the center of the home, there is a significant uptick in the at home foodie. Knives Manufacturer's product manager has suggested that the company could make better use of its Robotics Department by manufacturing high-end cutlery for the at- home market. In fact, to support his position, the product manager has a market study that indicates an expanding market for high-end cutlery for the home market and a need for additional suppliers. The product manager believes that Knives Manufacturer, Inc., could expect to sell 75,000 sets of high-end home-market cutlery annually at a price of $500 per set. The estimated costs to manufacture Home Chef cutlery is presented below. Home Chef Cutlery data $500 Selling Price per Set: Cost per Set: Molded Plastic Carbon Steel - laser cut Robotics time ($50/hr) Direct labor Manufacturing overhead Selling and admin. cost Total costs Profit per set of Home Chef knives $25 25 100 25 75 20 270 $230 The Home Chef knife sets are laser-cut from a stainless-steel plate and have only 14 steps in their manufacturing process. Other information pertinent to Knives Manufacturer, Inc.'s operations is presented below. Purchased products - other costs: Total fixed and variable selling and administrative costs for the purchased knives would be $12 per set. Selling and Administrative costs: An allocated $8 fixed overhead cost per unit is included in the selling and administrative cost for all purchased and manufactured products. Manufacturing overhead: The overhead included in the above costs is a combined variable and fixed amount. In the Robotics Department, Knives Manufacturer, Inc., uses Robotics hours as the application base for manufacturing overhead. Included in the manufacturing overhead for the current year is $13,500,000 of fixed, factory-wide manufacturing overhead in the Robotics Department. REQUIRED: 1. Maximize Knives Manufacturer's profitability, recommending which product or products should be manufactured and/or purchased. a. Support your recommendation by an analysis that will demonstrate the associated financial impact. Compute profitability through contribution margin using a variable costing income statement. Your analysis should compare the current contribution margin to the other alternative/alternatives under consideration. Hint: This is a short-term decision. In the short run, fixed costs remain the same. The financial comparison should only include variable costs. Knife Manufacturing Business Selling price (a) 1,000 Polypropylene Handle 25 High Carbon Stainless Steel - Forged 300 Robotic Time (3 Hour) 150 Direct Labor 200 Variable Manufacturing Overhead 105 Variable Selling and Admin Overhead 32 Total Variable Cost (b) 812 Contribution Margin (c-a-b) 188 Fixed Manufacturing Overhead 45 Fixed Selling and admin cost 8 oo Net Profit 135 Contribution per Robotic Hour (c/robotic hours) 63 Evaluation of Bon Appetit Inc - Proposal Selling price (a) 1,000 Variable Cost Purchase Price 850 Variable selling and administrative cost (12-8) 4. Contribution Margin per unit 146 Evaluation of High End home Cutlery Selling price (a) 500 Variable Cost Molded Plastic 25 100 Carbon Steel - laser cut Robotics time (1 Hour) 50 Direct labor 75 Variable Manufacturing Overhead (50-45) 5 Variable Selling and Admin Overhead (20-8) 12 Total Variable Cost (b) 267 Contribution Margin (a-b) 233 Fixed Manufacturing overhead 45 Fixed Selling and admin. cost 8 Net Profit 180 Contribution Margin (a-b) 233 Fixed Manufacturing overhead 45 Fixed Selling and admin. cost 8 Net Profit 180 Contribution per Robotic Hour 180