Birch company normally produces and sells 37000 units of

Assignment Help Accounting Basics
Reference no: EM13580942

Birch Company normally produces and sells 37,000 units of RG-6 each month. RG-6 is a small electrical relay used as a component part in the automotive industry. The selling price is $49 per unit, variable costs are $19 per unit, fixed manufacturing overhead costs total $224,000 per month, and fixed selling costs total $303,000 per month.

Employment-contract strikes in the companies that purchase the bulk of the RG-6 units have caused Birch Company's sales to temporarily drop to only 12,000 units per month. Birch Company estimates that the strikes will last for two months, after which time sales of RG-6 should return to normal. Due to the current low level of sales, Birch Company is thinking about closing down its own plant during the strike, which would reduce its fixed manufacturing overhead costs by $55,000 per month and its fixed selling costs by 11%. Start-up costs at the end of the shutdown period would total $14,000. Because Birch Company uses Lean Production methods, no inventories are on hand.

Requirement 1:
(a) Assuming that the strikes continue for two months, compute the increase or decrease in income in closing the plant. (Input the amount as positive value. Omit the "tiny_mce_markerquot; sign in your response.)

Reference no: EM13580942

Questions Cloud

Refer to btn 19-3 of the course text fdp company produces a : refer to btn 19-3 of the course text. fdp company produces a variety of home security products. gary price the companys
An employer provides all of his employees with life : an employer provides all of his employees with life insurance protection equal to twice the employees annual salary.
The fasb was influenced by feedback from interested parties : the fasb was influenced by feedback from interested parties when pension accounting rules were developed. please cite
Wagner industrial motors which is currently operating at : wagner industrial motors which is currently operating at full capacity has sales of 2320 current assets of 660 current
Birch company normally produces and sells 37000 units of : birch company normally produces and sells 37000 units of rg-6 each month. rg-6 is a small electrical relay used as a
A firm has a retention ratio of 40 percent and a : a firm has a retention ratio of 40 percent and a sustainable growth rate of 7.60 percent. the capital intensity ratio
The green giant has a 5 percent profit margin and a 41 : the green giant has a 5 percent profit margin and a 41 percent dividend payout ratio. the total asset turnover is 1.6
In recent years companies have reduced what they offer for : in recent years companies have reduced what they offer for retiree heath benefits eliminated them or reduced their
Charles has agi of 50000 and has made the following : charles has agi of 50000 and has made the following payments related to land he inherited from his deceased aunt and a

Reviews

Write a Review

Accounting Basics Questions & Answers

  Determining the adjusting entry

On November 1, 2009, Bug Busters collected $6,000 in advance for three months of service to be provided beginning on that date. It was credited in full to unearned rent revenue. Assuming the accounting year ends December 31, give the adjusting ent..

  You have 15000 you want to invest for the next 40 years you

you have 15000 you want to invest for the next 40 years. you are offered an investment plan that will pay you 8 percent

  A company use a single-step vs. a multi-step income

Why would a company use a single-step vs. a multi-step income statement? For what type of business is a multi-step income statement most appropriate?

  Explain how understanding of a clients business can

explain how understanding of a clients business can provide value-added services that an auditor could use to assist a

  Journalize the following transactions and omit explanations

ABC Corporation purchased $15,000 of office furniture by putting $7,000 down in cash and the rest on account on April 8.

  Net present value of the investment in this machinery

flights inc. is considering buying some specialized machinerythat would enable the company to obtain a six-year

  Issued preferred stock for the first time 400 shares

issued preferred stock for the first time 400 shares 6percent cumulative par 100 sold for 130 per share 100000 shares

  What is the free cash flow to the firm

A firm reports EBIT of $100 million. The income statement shows depreciation of $20 million. If the tax rate is 35% and total capital expenditures and increases in working capital total $10 million, what is the free cash flow to the firm?

  Relationship between tax base and tax rate

What is the relationship between tax base and tax rate in determining the revenue collected by the government? Give an example of how a particular tax would fit into the various components of the equation.

  Determining firm gross profit

Your firm has the following income statement items; sales of 50,250,000; income tax of 1,744,000.00; operating expenses of 10,115,000; cost of goods sold of 35,025000 and interest expense of 750,000. What is the amount of the firm's gross profit.

  Prepare the entry to record the merchandise returns if no

halifax manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and

  Net income of financial brokers partnership

Shue withdrew $240,000 as withdrawals and contributed equipment valued at $50,000 to the partnership. What was the net income of the Financial Brokers Partnership for 2008?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd