Williams Auto has a machine that installs tires. The machine is now in need of repair. The machine originally cost $10,900 and the repair will cost $1,900, but the machine will then last two years. The labor cost of operating the machine is $0.80 per tire. Instead of repairing the old machine, Williams could buy a new machine at a cost of $5,900 that would also last two years; the labor cost would then be reduced to $0.60 per tire. Williams expects to install 10,900 tires in the next two years. Required: a. Determine the total (two-years) cost for both repairing and replacing the machine. Total cost to repair Total cost to replace b. Should Williams repair or replace the machine? Repair O Replace2. Lance's Diner has a hot-lunch special each weekday and Sunday afternoon. The cost of food and other variable costs for each meal served is $4.30; weekly fixed costs (e.g., building depreciation and equipment rental costs) are $6,600, regardless of how many days the diner is open per week. Lance has an average of 800 customers per day. Required: a. What is the lowest price in total (not per meal) that Lance should charge for a special group of 500 that wants to come on Saturday for a family reunion? b. What should be the lowest price per meal that Lance should charge for the hot-lunch special served on weekdays and Sunday afternoons? (Round "Lowest price per meal" answer to 2 decimal places.) a. Lowest price in total b. Lowest price per meal3. Grant Industries. a manufacturer of electronic parts, has recently received an invitation to bid on a special order for 23.000 units of one of its most popular products. Grant currently manufactures 46,000 units of this product in its Loveland, Ohio, plant. The plant is operating at 50% capacity. There will be no marketing costs on the special order. The sales manager of Grant wants to set the bid at $10 because she is sure that Grant will get the business at that price. Others on the executive committee of the firm object, saying that Grant would lose money on the special order at that price. Units 46, 000 69,000 Manufacturing costs: Direct materials $ 92, 000 $ 138,900 Direct labor 138, 090 207,900 Factory overhead 322,090 414,000 Total manufacturing costs $ 552,000 $ 759,600 Unit cost $ 12 $ 11 Required: 2. What is the relevant cost per unit? What do you think the minimum short-term bid price per unit should be? What would be the impact on short-term operating income if the order is accepted at the price recommended by the sales manager? 4. What would the total opportunity cost be if by accepting the special order the company lost sales of 6,400 units to its regular customers? Assume the preceding facts plus a normal selling price of $22 per unit. Complete this question by entering your answers in the tabs below. Required 2 Required 4 What is the relevant cost per unit? What do you think the minimum short-term bid price per unit should be? What would be the impact on short-term operating income if the order is accepted at the price recommended by the sales manager? Relevant cost per unit Bid price per unit should be any price above Change in short-term operating incomeWhat would the total opportunity cost be if by accepting the special order the company lost sales of 6,400 units to its regular customers? Assume the preceding facts plus a normal selling price of $22 per unit. Total opportunity cost0 Required information {The milowing inforrriarion applies to the questions displayed below] Green Grow Incorporated [GGD manufactures lawn fertilizer. Because of the product's very high quality, (361 oen receives special orders from agricultural research groups. For each type of fertilizer sold, each bag is carefully filled to have the precise mix of components advertised for that type of fertilizer. GGl's operating capacity is 28,000 onehundredpound bags per month, and it currently is selling 26,000 bags manufactured in 26 batches of'l,000 bags each. The rm just received a request for a special order of 6,200 onehundredpound bags of fertilizer for $160,000 from APAC, a research organization. The production costs would be the same, but there would be no variable selling costs. Delivery and other packaging and distribution services would cause a onetime $3,500 cost for GGI. The special order would be processed in two batches of 3,100 bags each. [No incremental batchJevel costs are anticipated. Most of the hatchlevel costs in this case are shortterm xed costs, such as salaries and depreciation.) The following information is provided about GGl's current operations: 531E! :Hi'tid WWI\"CHM :Ee'vr-'ll'iii '. Ifri'li' airmen 5.39.5.3- ii'il'? es: Sales price $ 42 Variable manufacturing costs 15 Variable selling costs 2 Fixed manufacturing costs 14 Fixed marketing costs 8 No marketing costs would be associated with the special order. Because the order would be used in research and consistency is critical, APAC requires that 661 ll the entire order of 6,200 bags. Assume that the $14.00 xed manufacturing overhead cost per unit consists of facilitylevel costs {$11.00lun'rt atthe 26,000unit output level), with the remainder being setuprelated [i.-e., batchlevel} costs. Assume that the setup~related costs increase in total with the number of batches produced and that the facilitylevel xed costs do not vary in total, with eitherthe number of units produced or the number of batches produced during a period. ' J Required: 1. What is the total relevant cost of filling this special sales order? 2. What would be the change in operating income lithe special order is accepted? 3. What is the breakeven selling price per unit for the special sales order lie, what is the selling price that would result in a zero effect on operating income)? 4. Prepare comparative income statements, using the contribution format, for both the current situation and assuming the special order is accepted at the breakeven price determined in requirement 3. Required 3 Required 4 What is Hie total relevant oasis offilling this special aalea ord'er'? Required 1 Required 2 Required 3 Required 4 What would be the change in operating income if the special order is accepted? Operating income would by What is the breakeven selling price per unit for the special sales order (i.e., what is the selling price that would result in a zero effect on operating income)? (Round your answer to 2 decimal places.) Breakeven selling price per unitPrepare comparative income statements, using the contribution format, for both the current situation and assuming the special order is accepted at the breakeven price determined in requirement 3. Current Situation Current Situation + Special Sales Order Sales: Regular Special order Less: Variable costs. Manufacturing Marketing Contribution margin Less: Fixed costs Manufacturing Marketing One-time packing/delivery Operating income