Incremental analysis and project addition

Reference no: EM13127167

Sales................................................................$950,000

Variable costs.................................................. 450,000

Fixed costs....................................................... 310,000

A proposed addition to Farrell's factory is estimated by the sales manager to increase sales by a maximum of $750,000. The company's accountants have determined that the proposed addition will add $320,000 to fixed costs each year.

A- Explain why the existing $310,000 of fixed costs is a sunk cost, while the $320,000 of fixed costs associated with the proposed addition is an out of pocket cost.

B- Calculate by how much the proposed addition will either increase or reduce operating income.

Reference no: EM13127167

Questions Cloud

Behavioral study of obedience : Psychology 1010: CRITIQUE ASSIGNMENT, Article: "BEHAVIORAL STUDY OF OBEDIENCE" by Stanley Milgram ( yale university) journal of abnormal and social psychology.

Read the persuasive essay, "the case for torture," by michae : Read the persuasive essay, "The Case for Torture," by Michael Levin. Identify and analyze the argument(s) in terms of the conclusion(s) and premises. Then, write a short (1-2 pages) critical reaction.

Function on circle and antipodal points : Let S be the circle in the plane {(x,y) in R^2: x^2 + y^2 = 1} and f: S --> R be a continuous map. Show that there exists (x,y) on S such that f(x,y) = f(-x,-y).

Find confidence interval estimate for speed of all cars : The population of car speeds is approximately normally distributed. Determine a 90% confidence interval estimate for the speed of all cars.

Incremental analysis and project addition : Explain why the existing $310,000 of fixed costs is a sunk cost, while the $320,000 of fixed costs associated with the proposed addition is an out of pocket cost.

Find enough evidence to reject manufacturer-s claim : A random sample of 43 light bulbs has a mean life of 677 hours with a standard deviation of 90 hours. Do you have enough evidence to reject the manufacturer's claim?

Renting prime store space : Lisa's Boutique is renting prime store space at the Regional mall and just signed a five-year lease effective January 1, with the following terms:

Write a essay about zora neale hurston''s : write a essay about Zora Neale Hurston's Their Eyes Were Watching God in which you develop your own reading of Janie and the significance of her journey in relation to the historical and social contexts in which it take place.

Dimensional analysis technique : Please use Dimensional analysis technique and show your work. What s the length in meters of a 300. ft football field?

User Account

All Pages