(C1 - Extra Problem 01 ‘Smith Corporation manufactures desk chairs in two operations: molding and assembly. provides the following information: Molding Assembly Annual capacity 80,000 units 60,000 units ‘Annual production 60,000 units 60,000 units Fixed operating costs, 8 720.000 s 600.000 Fixed operating costs per unit produced 8 12 $10 Each chair sels for $84 and has direct material costs of $24 incurred at he start ofthe molding operation. Direct. material cost are Smith's only variable cost. Smith can sell what ever it produces, Smith has no alternative uses for its production capacity Each of the folowina 4 auestions refers onlvto the precedina data. There is no connection between the auestions. Part A ‘Smiths considering the purchase of robotic assembly devices in the Assembly Department. These devices ‘would increase annual Assembly Department output by 1000 units. The annual cost of these devices is $20,000. ‘Smith's annual operating income would (increase or decrease) bys PartB ‘The production manager of the Molding Department has submitted a proposal to do faster setups that would increase the caoacity of he Moldina Deoartment by 8000 units and would cost only $4000 ver vear. Ifthe production managers orovosal were accented, Smiths annual ‘operating income would (Increase or decrease) Cys Fd) Part Zhang Corporation offers to perform the assembly operation for up to 24,000 units for $12 per unit if Zhang's offer were accepted, Smith's annual operating income ‘would (increase or decrease) bys