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The Vegas Corporation manufactures filing cabinets in two operations: machining and finishing. It provides the following information: (Click the icon to view the department information.) Each cabinet sells for $70 and has direct material costs of $25 incurred at the start of the machining operation. Vegas has no other variable costs. Vegas can sell whatever ou produces. The following requirements refer only to the preceding data. There is no connection between the requirements. Data Table Annual capacity Annual production Fixed operating costs (excluding direct materials) Fixed operating costs per unit produced Machining 190,000 units 165,000 units $2,310,000 $14 per unit Finishing 165,000 units 165,000 units $1,815,000 $11 per unit X

The Vegas Corporation manufactures filing cabinets in two operations: machining and finishing. It provides the following information: (Click the icon to view the department information.) Each cabinet sells for $70 and has direct material costs of $25 incurred at the start of the machining operation. Vegas has no other variable costs. Vegas can sell whatever ou produces. The following requirements refer only to the preceding data. There is no connection between the requirements. Data Table Annual capacity Annual production Fixed operating costs (excluding direct materials) Fixed operating costs per unit produced Machining 190,000 units 165,000 units $2,310,000 $14 per unit Finishing 165,000 units 165,000 units $1,815,000 $11 per unit X

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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The Vegas Corporation manufactures filing cabinets in two operations: machining and finishing. It provides the following information: (Click the icon to view the department information.) Each cabinet sells for $70 and has direct material costs of $25 incurred at the start of the machining operation. Vegas has no other variable costs. Vegas can sell whatever out produces. The following requirements refer only to the preceding data. There is no connection between the requirements. Data Table Annual capacity Annual production Fixed operating costs (excluding direct materials) Fixed operating costs per unit produced ($2,310,000/165,000; $1,815,000/165,000) Machining 190,000 units 165,000 units $2,310,000 $14 per unit Finishing 165,000 units 165,000 units $1,815,000 $11 per unit X Requirement 1. Vegas is considering using some modern jigs and tools in the finishing operation that would increase annual finishing output by 1.250 units. The annual cost of thes and tools is $25,000. Should Vegas acquire these tools? Show your calculations. Producing 1,250 more units will generate contribution (throughput) margin and operating income because
Transcribed Image Text:The Vegas Corporation manufactures filing cabinets in two operations: machining and finishing. It provides the following information: (Click the icon to view the department information.) Each cabinet sells for $70 and has direct material costs of $25 incurred at the start of the machining operation. Vegas has no other variable costs. Vegas can sell whatever out produces. The following requirements refer only to the preceding data. There is no connection between the requirements. Data Table Annual capacity Annual production Fixed operating costs (excluding direct materials) Fixed operating costs per unit produced ($2,310,000/165,000; $1,815,000/165,000) Machining 190,000 units 165,000 units $2,310,000 $14 per unit Finishing 165,000 units 165,000 units $1,815,000 $11 per unit X Requirement 1. Vegas is considering using some modern jigs and tools in the finishing operation that would increase annual finishing output by 1.250 units. The annual cost of thes and tools is $25,000. Should Vegas acquire these tools? Show your calculations. Producing 1,250 more units will generate contribution (throughput) margin and operating income because
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