Makita company manufactures a fast-bonding glue in its

Assignment Help Accounting Basics

Reference no: EM13607301

Makita Company manufactures a fast-bonding glue in its Northwest plant. The company normally produces and sells 48,000 gallons of the glue each month. This glue, which is known as MJ-7, is used in the wood industry to manufacture plywood. The selling price of MJ-7 is $36 per gallon, variable costs are $20 per gallon, fixed manufacturing overhead costs in the plant total $221,000 per month, and the fixed selling costs total $320,000 per month.

Strikes in the mills that purchase the bulk of the MJ-7 glue have caused Makita Company's sales to temporarily drop to only 14,000 gallons per month. Makita Company's management estimates that the strikes will last for two months, after which sales of MJ-7 should return to normal. Due to the current low level of sales, Makita Company's management is thinking about closing down the Northwest plant during the strike.

If Makita Company does close down the Northwest plant, fixed manufacturing overhead costs can be reduced by $60,000 per month and fixed selling costs can be reduced by 12%. Start-up costs at the end of the shutdown period would total $12,000. Because Makita Company uses Lean Production methods, no inventories are on hand.

Required:

1a.	Assuming that the strikes continue for two months, what is the impact on income by closing the plant. (Input the amount as a positive value.)

Reference no: EM13607301

Questions Cloud

Cereal is sold by weight not volume this introduces : cereal is sold by weight not volume. this introduces variability in the volume due to settling. as such the height to

Nw the elevator is moving downward with a velocity of v : a single mass m1 3.6 kg hangs from a spring in a motionless elevator. the spring constant is k 294.0 nm. now three

Global publishers has collected the following data for : global publishers has collected the following data for recent monthsmonth issues published total costmarch 20500

Assume the only thermal interaction is conduction between : as a committed olympic weightlifter you bring alonf a barbell on your campaign trip. each end of the bar carries a mass

Makita company manufactures a fast-bonding glue in its : makita company manufactures a fast-bonding glue in its northwest plant. the company normally produces and sells 48000

Create a hypothetical budget similar to the one you : just to give you some guidelines on the extra credit budget assignment we talked about. there are two parts1. create a

An electric dipole consists of charges e and -e separated : an electric dipole consists of charges e and -e separated by 0.40 nm. it is in an electric field of strength 2.50 x 106

Nw the elevator is moving downward with a velocity of v : a single mass m1 3.6 kg hangs from a spring in a motionless elevator. the spring constant is k 294.0 nm. now three

At december 31 before adjusting and closing the accounts : at december 31 before adjusting and closing the accounts had occurred the allowance for doubtful accounts of seaboard

User Account

All Pages