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CoursHeroTranscribedText: You have been asked to assist the management of Ironwood Corporation In arriving at certaIn decisions. Ironwood has Its home ofce In Ivllchlgan and leases factory buildings In Wisconsin. Minnesota, and North Dakota. all of whlch produce the same product. Ironwood's management provided you with a projection of operations for next year. as follows. Total Hisconsin Minnesota North Dakota Sales revenue EE?9,EBB 544?,EBB 32?1,EBB 5161,EBB Fixed costs Factory 217,,EBB 115,EBB 5:1, EBB 118, EBB Administration H,EBB 115,EBB 21, EBB T, EBB Variable costs ZEB,EBB 13?,EBB Ba, EBB 69, EBB Alloca ted home oFFi ce costs 1E4,EBB 11?,EBB 3?, EBB 2B, EBB Total $584,,EBB 5344,3389 3196,EBB 3144,EBB Operating profit $195,EBB $1E3,EBB 3 P5,EBB 3 1?,EBB The sales price per unit is $5. Due to the marginal results of operatlons of the factory In North Dakota. Ironwood has decided to cease its operatlons and sell that factory's machinery and equipment by the end of this year. Ironwood expects that the proceeds from the sale of these assets would equal all ten'rrlnatlon costs. Ironwood. however. Iwould like to continue sewing most of Its customers In that area if it Is eoonomlcally feasible and Is considering one of the followrng three altematlves: - Expand the operatIons of the Minnesota factory by using space presently Idle. This move would result In the following changes In that factory's operations. Increase truer Minnesota Factory's current operations Sales revenue r132 Fin-red cost 5 Factory 2E Administration '3 Under this proposal, variable costs would be $2 per unit sold. - Emer Into a longterm contract with a competltor that will serve that area's customers. This competitor would pay Ironwood a royalty of $0.9 per unit based on an estlm ate of 28.000 units being sold. - Close the North Dakota factory and not expand the operations of the Minnesota factory. Total home ofce costs of $104,000 will remain the same under each situation. Hequlred: To assist the management of Ironwood Corporation. complete tire following schedule computing Ironwood's estlmated operating prot from each of die following options: 5. Expansion of the Minnesota factory. I:I. Negotiatlon oftj'ie longterm oonlract on a royalty basis c. Shutdown of the North Dakota operations with no expanslon at other locations

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