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the district in CHA ADAPTED 201, 6P16-47. Comprehensive; product line Clean-N-Brite is a multiproduct company with you ishing compounds, regular and heavy-duty, under the HouseSafe label. The forces furing plants. The Cincinnati plant manufactures and distributes two household die manufactured and sold, are presented in the following statement: results for the first six months of 2020, when 100,000 cases of each compound HouseSafe Compounds - Cincinnati Plant Forecasted Results of Operations For the Six-Month Period Ending June 30, 2020 (In S000) Regular Heavy-Duty $3,000 (1,900) $1,100 Sales. Cost of sales. Gross profit.. Selling and administrative expenses Variable Fixed $ 2,000 (1,600) $ 400 BE $ 400 240 $11 Total selling and administrative expenses Income (loss) before taxes. $ (640) $ (240) $ 700 360 $(1.060) $ 40 52 "The foxed selling and administrative expenses are allocated between the two products on the basis of olur volume on the internal reports $30 during the first six months of 2020. The manufacturing costs by case of product file The sales price per case for the regular compound will be $20 and for the heavy.de Heavy-Duty Raw material. Direct labor Variable manufacturing overhead. Fixed manufacturing overhead Total manufacturing cost Variable selling and administrative costs Cost per Case Regular $ 7.00 4.00 1.00 4.00 $16.00 $ 4.00 $ 800 40 2.0 50 $19.00 $70 *Depreciation charges are 50 percent of the fixed manufacturing overhead of each line Chapter 10 Relevant information for Decision Making capacity is 200,000 cases of each product. However, the plant is capable of producing 250.000 Each product is manufactured on a separate production line. Annual normal manufacturing cases of regular compound and 350.000 cases of heavy-duty compound annually. The following schedule reflects top management consensus regarding the price/volume alter- natives for the HouseSafe products for the last six months of 2020, which are essentially the same as those during its first six months. Regular Compound Alternative Prices Sales Volume (per case) (in cases) $18 120,000 20 100,000 21 90,000 22 80,000 23 50,000 Heavy-Duty Compound Alternative Prices Sales Volume (per case) (in cases) $25 175,000 27 140,000 30 100,000 32 55,000 35 35,000 a. Top management believes the expected loss for the first six months reflects a tight profit margin caused by intense competition and that many competitors will be forced out of this market by next year, so the company's profits should improve. What unit selling price should Clean-N-Brite select for each HouseSafe compound for the remaining six months of 2020? Support your answer with appropriate calculations. b. Without prejudice to your answer for (a), assume that the optimum price/volume alternatives for the last six months will be a selling price of $23 and volume level of 50,000 cases for the regular compound and a selling price of $35 and volume of 35,000 cases for the heavy-duty compound. 1. Should Clean-N-Brite consider closing its Cincinnati operations until 2021 to minimize its losses? Support your answer with appropriate calculations. 2. Identify and discuss the qualitative factors that should be considered in deciding whether the Cincinnati plant should be closed during the last six months of 2020. a a the district in the sh Comprehensive; product line Clean-N-Brite is a multiproduct company with several mana turing plants. The Cincinnati plant manufactures and distributes two household cleaning and po ishing compounds, regular and heavy-duty, under the House Safe label. The forecasted opetuig results for the first six months of 2020, when 100,000 cases of each compound are expected to be manufactured and sold, are presented in the following statement: HouseSafe Compounds-Cincinnati Plant Forecasted Results of Operations For the Six-Month Period Ending June 30, 2020 Total Regular $ 2,000 (1.600) $ 400 (In $000s) Heavy-Duty $3,000 (1,900) $ 1.100 Sales. Cost of sales. $5,000 (3,500 $1,500 $ 700 360 $ 1.100 600 Gross profit. Selling and administrative expenses Variable Fixed Total selling and administrative expenses Income (loss) before taxes...... $ 400 240 $ (640) $ (240) $(1,060) $ 40 $(1.700) $ (200 *The fixed seling and administrative expenses are allocated between the two products on the basis of dollar sales volume on the internal reports. The sales price per case for the regular compound will be $20 and for the heavy-duty will be $30 during the first six months of 2020. The manufacturing costs by case of product follow. Raw material Direct labor Variable manufacturing overhead. Fixed manufacturing overhead Total manufacturing cost Variable selling and administrative costs Cost per Case Regular Heavy-Duty $ 7.00 $ 8.00 4.00 4.00 1.00 2.00 4.00 5.00 $16.00 $ 4.00 $ 7.00 $19.00 *Depreciation charges are 50 percent of the fixed manufacturing overhead of each line. Cambridge Business Publish Chapter 10 Relevant information for Decision Making capacity is 200,000 cases of each product. However, the plant is capable of producing 250.000 cases of regular compound and 350.000 cases of heavy-duty compound annually. The following schedule reflects top management consensus regarding the price/volume alter- natives for the HouseSafe products for the last six months of 2020, which are essentially the same as those during its first six months. Regular Compound Alternative Prices Sales Volume (per case) (in cases) $18 120,000 20 100,000 21 90,000 22 80,000 23 50,000 Heavy-Duty Compound Alternative Prices Sales Volume (per case) (in cases) $25 175,000 27 140,000 30 100,000 32 55,000 35 35,000 a. Top management believes the expected loss for the first six months reflects a tight profit margin caused by intense competition and that many competitors will be forced out of this market by next year, so the company's profits should improve. What unit selling price should Clean-N-Brite select for each HouseSafe compound for the remaining six months of 2020? Support your answer with appropriate calculations. b. Without prejudice to your answer for (a), assume that the optimum price/volume alternatives for the last six months will be a selling price of $23 and volume level of 50,000 cases for the regular compound and a selling price of $35 and volume of 35,000 cases for the heavy-duty compound. 1. Should Clean-N-Brite consider closing its Cincinnati operations until 2021 to minimize its losses? Support your answer with appropriate calculations. 2. Identify and discuss the qualitative factors that should be considered in deciding whether the Cincinnati plant should be closed during the last six months of 2020. a a

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