Hernon Precision Tools makes cutting tools for metalworking operations

al ecis i Data Table - X prma A6 EX4 od ce $ Ente $ pe $ 0.5 ne Selling price 90 $ 140 Variable manufacturing cost per unit 40 $ 80 Variable marketing cost per unit 12 $ 27 Budgeted total fixed overhead costs 380,000 $ 595,000 Hours required to produce one unit on the regular machine 1.0 Additional information includes the following: a. Hernon 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 $595,000 budgeted fixed overhead costs of EX4, $375,000 are lease payments for the high-precision machine. This cost is charged entirely to EX4 because Hernon 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. In A6 apa st Print Done se H ac d He lation benefit from only selling A6 or EX4 with the increased capacity of the regular machine. (Enter an amount in each input cell inclu ation.) i Requirements - uct ob your hefil edre 1. What product mix - that is, how many units of A6 and EX4 - will maximize Hernon's operating income? Show your calculations. 2. Suppose Hernon can increase the annual capacity of its regular machines by 10,000 machine-hours at a cost of $100,000. Should Hernon increase the capacity of the regular machines by 10,000 machine hours? By how much will Hernon's operating income increase or decrease? Show your calculations. 3. Suppose that the capacity of the regular machines has been increased to 60,000 hours. Hernon has been approached by Often Corporation to supply 14.000 units of another cutting tool, V2, for $133 per unit. Hernon must either accept the order for all 14,000 units or reject it totally. V2 is exactly like A6 except that its variable manufacturing cost is $50 per unit. (It takes one hour to produce one unit of V2 on the regular machine, and variable marketing cost equals $12 per unit.) What product mix should Hernon choose to maximize operating income? Show your calculations. felling EX pacity sts of e Herr aching Print Done st of $100 se? Show benefit from only selling A6 or EX4 with the increased capacity of the regular machine. (Enter an amount in eac Question Help 5 Hernon 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. Ab 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 fequirements Requirement 1. What product mix - that is, how many units of Ab and EX4 - will maximize Hemon's operating income? Show your calculations (Enter an amount in each input coll including zoro balances.) Begin by calculating the benefit from only selling AB or EXA A6 EX4 Hours of constrained resource Less Net relevant benefit Hornon should use its capacity to produce since the net relevant benefit is The additional contribution from selling EX4 rather than Abis to cover the additional costs of leasing the high-precision machine Requirement 2. Suppos Homon can increase the annual capacity of its regular machines by 10,000 machine-hours at a cost of $100,000. Should Heron increase the capacity of the regular machines by 10,000 machine hours? By how much will Hornon's operating income increase or decrease? Show your calculations Begin by calculating the benefit from only selling Ab or EX4 with the increased capacity of the regular machine. (Enter an amount in each input coll including 2010 han Choose from any list or enter any number in the input fields and then continue to the next question Save for Later Hernon Precision Tools makes cutting tools for metalworking operations. It makes two types of tools: A8, a regular cutting tool, and EX4, a high-precision cutting tool. As 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 2. Suppose Hornon can increase the annual capacity of its regular machines by 10.000 machine hours at a cost of $400,000. Should Hornon increase the capacity of the regular machines by 10,000 machine hours? By how much wil Hornon's operating income increase or decrease? Show your calculations Begin by calculating the benefit from only selling A6 or Ext with the increased capacity of the regular machine. (Enter an amount in each input all including zero balances A6 EX4 Hours of constrained resource Less Cost of increasing capacity Net relevant benefit Should Hernon increase the capacity of the regular machines by 10,000 machine hours? By how much will Hernon's operating income increase? Hernon increase the capacity of the regular machine by 10,000 machine hours. Hornon's operating income will increase by Requirement 3. Suppose that the capacity of the regutar machines has been increased to 60,000 hours. Hernon has been approached by Often Corporation to supply Choose from any list or enter any number in the input fields and then continue to the next question Hernon Precision Tools makes cutting tools for metalworking operations. It makes two types of tools: A6, a regular cutting tool, and EX4, a high-pre manufactured on a regular machine, but EX4 must be manufactured on both the regular machine and a high precision machine. The following infor (Click to view the information.) Read the fequirements product mix should Heron choose to maximize operating income? Show your calculations. First, determine the amount that should be used to determine if Hernon should accept Often's order A6 EX4 V2 Heron accept Often's order Next, determine the product mix for A6 and Ex4 that will maximize operating income along with the decision you made about Often's order. (Enter an input cell including zero balances.) A6 EX4 x Hours of constrained resource Loss: Net relevant benefit What product mix should Herrion choose to maximize operating income? (Enter an amount in each input cell, including zero balances.) Choose from any list or enter any number in the input fields and then continue to the next question Hours of constrained resource et relevant benefit What product mix should Hemon choose to maximize operating income? (Enter an amount in each input cell, including zero balances) Based on the above calculations, the product mix that maximizes operating income is units of V2 units of Ab, and units of EXA Choose from any list or enter any number in the input fields and then continue to the next question Save for Later