Assignment (ACCT 6202) The Rocky Mountain Catering Company specializes

Assignment (ACCT 6202)(Total points = 55 points)1) The Rocky Mountain Catering Company specializes in preparing Mexican dinners that iffreezes and ships to restaurants in the Denver area. When a diner orders an item, therestaurant heats and serves it. The budget data for the current year are given in the tablebelow:ProductSelling price to restaurantsVariable costNumber of units to be soldChicken Tacos$5$3250,000Beef Enchiladas$7$4125,000The company prepares the items in the same kitchens, delivers them in the same trucks,and so forth. Therefore, decisions about the individual products do not affect the fixedcosts of $735,000 per year.a. Compute the planned net income for the current year.b. Compute the break-even point in units, assuming that the company maintains itsplanned sales mix. Use the sales mix in terms of planned sales units (i.e. use theWeighted Average Contribution Margin method).c. Compute the break-even point in sales dollars, assuming that the company maintainsits planned sales mix. Use the sales mix in terms of planned sales dollars (i.e. use theWeighted Contribution Margin Ratio method). Verify that your answer is consistentwith the answer in (b).d. Suppose the company sells 78,750 units of enchiladas and 236,250 units of tacos, fora total of 315,000 units. Compute the net income. Compute the new breakeven pointwith this new sales mix. What can you conclude when you compare with results in(b)?(2 + 4 + 4 + 5 = 15 points)2) Savino Company has assembled the following data pertaining to its two products.Direct material cost per unitDirect labor cost per unitManufacturing overhead cost applied @ $16 permachine hour (per unit of product)Annual demand (in units)Thermometer Barometer$11$6$9$4$32$1628,00020,000Past experience has shown that the fixed manufacturing overhead component included inthe cost per machine hour averages $10. The selling price of thermometer and barometeris $60 and $35 respectively.(2 + 5 + 7 + 6 = 20 points)a) Rank these two products according to profitability using (i) Contribution margin perunit as the profitability metric and (ii) Contribution Margin Ratio as the profitabilitymetric.b) If 50,000 machine hours are available for Savino for the manufacture ofthermometers and barometers, and Savino wants to follow a strategy to maximizecurrent profits, how many units of each product should the firm manufacture? Howmany units of each product would Savino leave behind in the market for thecompetitors to pickup because of the constraint on machine capacity? How muchprofit would the company make under this production plan? (Hint: Machine hoursrequired for each product is not given directly to you but you should be able to look atthe data and infer a way around)c) Suppose Savino has a policy of meeting the entire market demand by outsourcingeven if it is unable to produce enough units in house. Also, assume that Savino canpurchase thermometers and barometers from a trusted supplier at a price of $50 and$23 per unit respectively. Savino has a policy of first utilizing 100% of capacity inhouse before it considers outsourcing options. Under these circumstances,recommend a profit maximizing optimal production plan (i.e. how many units ofthermometers and barometers will be produced in house?). Also, how many units ofthermometers and barometers will be outsourced? What is the amount of profit thatwould be generated now based on the production and outsourcing plan?d) With all other things remaining the same, if Savino is able to reduce the directmaterial cost for a barometer from $6 to $3 per unit, how will your answer change forpart (c)? Justify your answer with relevant calculations.3) Cocoa Confections provides you with the following information for the most recent yearof operations. The firm informs you that manufacturing overhead equals 150% of directlabor costs.Direct materials beginning inventoryDirect materials ending inventoryBeginning WIP inventoryEnding WIP inventoryBeginning FG inventoryEnding FG inventoryDirect materials issued to productionTotal manufacturing costs charged to production =$90,000$75,000$80,000$100,000$125,000$175,000$200,000$900,000(Total manufacturing costs charged to production = direct materials issued to production + directlabor cost + manufacturing overhead).Revenues$1,250,000Selling and Administrative costs$265,000Required:Calculatea. The cost of direct materials purchased.b. Direct labor costs.c. Manufacturing overhead costs.d. Prime costs.e. Conversion costs.f. Cost of goods manufactured.g. Cost of goods sold.(10 points)4) Usman anticipates having some spare time during the coming summer and is considering fouroptions. To determine the best option, he estimates the revenues and the costs associate with eachoption: Option 1— Revenue: $2,500, cost: $700; Option 2—Revenue: $5,000, cost: $3,800;Option 3—Revenue: $1,700, cost $250; Option 4(charity work)—Revenue $0, cost $400.Required:a. Based only on estimated revenues and costs, what is the value of each of the four options?b. Based only on estimated revenues and costs, what is the opportunity cost of each of the fouroptions? c. Based only on estimated revenues and costs, identify the option for which the value isgreater than the opportunity cost.d. What benefit is Usman implicitly attaching to doing charity work if he chooses Option 4? (10points)