Compute the incremental profit electron control would earn

Assignment Help Business Economics

Reference no: EM1346296

Please read the case study given below and answer questions given at the end.

Electron Control, Inc., sells voltage regulators to other manufacturers, who then customize and distribute the products to quality assurance labs for their sensitive test equipment. The yearly volume of output is 15,000 units. The selling price and cost per unit are shown below:

Selling price $200
Costs:
Direct material $35
Direct labor 50
Variable overhead 25
Variable selling expenses 25
Fixed selling expenses 15 150
Unit profit before tax $ 50

Management is evaluating the alternative of performing the necessary customizing to allow Electron Control to sell its output directly to Q/A labs for $275 per unit. Although no added investment is required in productive facilities, additional processing costs are estimated as:

Direct labor $25 per unit
Variable overhead $15 per unit
Variable selling expenses $10 per unit
Fixed selling expenses $100,000 per year

Question :

A. Compute the incremental profit Electron Control would earn by customizing its instruments and marketing directly to end users.

Reference no: EM1346296

Questions Cloud

Elucidate what impact does the dollar appreciation : Illustrate what will the average total cost be after 1 unit is produced. Elucidate what impact does the dollar appreciation have on the firm's international competitiveness.

Educating consumers on product use : Educating Consumers on Product Use - Suppose for a moment that you all are safety managers for a large company which makes consumer goods

Determine a company ranking in the industry : Find Wal-Mart's ranking in the industry including comparison of the corporation to its competitors. Good metrics to determine a company's ranking in the industry

What types of organizational patterns exist : Explain how can creating an outline improve your written communication and what types of organizational patterns exist, and how might you use them?

Compute the incremental profit electron control would earn : Compute the incremental profit Electron Control would earn by customizing its instruments and marketing directly to end users.

Question related to email communication : Explain what benefits have resulted from its use? What forms of para-verbal channels have developed in e-mail?

Elucidate why it is often claimed that hospitals compete : Elucidate why it is often claimed that hospitals compete for doctors rather than patients. What are some of the implications of this phenomenon.

Estimation of the opportunity cost : RLJ Technologies provides custom services to its loyalty consumers from Monday to Friday. David Lee, the co-owner, believes it is significant for employees to have Saturday & Sunday off to spend with their families.

Explain how the channels of communication influence employ : Behaviors that indicate conflict among employees- Explain how the channels of communication influence employee relations

User Account

All Pages