Hinds Industries, Inc. is a manufacturer of soup and condiment products under its ownstandard and premium labels.

Submit your answer in a single Excel file, with a separate tab for each question. Wherecalculations are required, it must be readily apparent to the grader how you arrived atyour answer. Verbal answers should be expressed clearly and concisely.1. Hinds Industries, Inc. is a manufacturer of soup and condiment products under its ownstandard and premium labels. The company has been in business for many years, and is a“household name”. Their Seattle soup plant has a capacity of 140,000 cases/month, buthas been operating at a normal volume of 95,000 cases/month. Hinds has beenapproached by Massive Mart, a large discount retailer, about producing a line of soupsunder a Massive Mart house label. Massive would initially place an order for 15,000cases/month, with the understanding that the order will be expanded if the product issuccessful. The initial order would be for a reduced line of four relatively simple soups,following Hinds’ normal recipes. All of these soups have essentially the same productioncost of $41 per case, as follows: ingredients and packaging, $20; direct labor, $5;overhead, $16. The overhead is 55% fixed manufacturing costs, 25% variablemanufacturing costs, and 20% allocated general corporate overhead. Hinds would incur$7,000/month additional setup costs if the order is accepted. Packaging would cost fortycents/case less because of a cheaper label used by Massive.Hinds normally sells these soups for $50/case. Massive Mart has offered $36/case,arguing that the steep discount is necessary for them to price the product in conformitywith their pricing philosophy and customer expectations.The regional marketing director is inclined to reject the offer, because it is below cost,and therefore Hinds will lose money on the contract. The ultimate decision is up to theregional director of operations. Discuss the factors that the operations director shouldconsider in making the decision.2. The marketing department of Waldorf, Inc. includes a graphic design department. Themarketing director is considering an offer from Graceful Graphics to outsource theirgraphic design needs. Graceful Graphics has offered to perform all necessary services ata contract cost of $290,000 per year. Currently, it costs Waldorf $345,000 per year to runthe graphic design department, as follows: payroll, $230,000; supplies and otherexpense, $35,000; depreciation on equipment, $20,000; occupancy costs, $60,000. Theoccupancy costs are based on a square foot allocation of occupancy costs of thecompany’s office building. The equipment has no salvage value. Discuss the factors themarketing director should consider in deciding whether to outsource this service.3. ChemCo, Inc. purchases the chemical googlite for $1,000/ton, and processes it at a costof $2,400/ton in order to obtain 1,800 pounds of G1, which can be sold for $2.50/lb. As anecessary result of the process, 200 pounds of G2 are also produced. G2 can be sold for75 cents/lb, or processed further into G3 at a cost of 40 cents/lb. G3 can be sold for$1.35/lb, while G2 can be sold for 75 cents/lb.ChemCo believes they lose money on G3, and plan to quit processing and selling it.They compute their cost per pound as $2.10, while it sells for only $1.35. The $2.10 isderived as: (1,000 + 2,400)/2,000 = $1.70 + .40 further processing = $2.10. AdviseChemCo.