What would be the change in monthly operating income

Assignment Help Accounting Basics

Reference no: EM131960838

Problem

Premier Manufacturing makes and distributes a wall clock that is popular with schools and other institutions. Normal monthly sales are 2,600 clocks at an average sale price of $40 per clock. Production of each clock takes 15 minutes of direct labor and has material costs of $15. The direct labor rate is $20 per hour, and overhead is applied at a rate of $38 per direct labor hour. The overhead spending is 60% fixed and 40% variable costs. Premier has been approached by a supplier offering to supply all of the clocks at a finished cost of $25 per clock. Assume that all fixed overhead would remain, but the variable overhead would be eliminated. What would be the change in monthly operating income if Premier buys the clocks instead of making them?

Reference no: EM131960838

Questions Cloud

What net amount of gross profit would precious have deferred : What net amount of gross profits would Precious have deferred in 2015 related to Soul's sale of inventory to Precious?

Evaluate the zippy as a business opportunity : Evaluate the zippy as a business opportunity for CEI. Evaluate the lease financing option for the zippy as well. Although CEI is a tax-paying entity.

Prepare the journal entries on september : Record the adjustments on December 31, 2018. Prepare the journal entries on September 30, 2019, to record payment of the notes payable at maturity.

What is cruise operating cash flow : You are considering an investment in Cruise, Inc. and want to evaluate the firm's free cash flow. From the income statement, you see that Cruise earned.

What would be the change in monthly operating income : Premier Manufacturing makes and distributes. What would be the change in monthly operating income if Premier buys the clocks instead of making them?

Calculate fields and struthers operating cash flow : Calculate Fields and Struthers' operating cash flow for 2015. (Enter your answer in millions of dollars rounded to 1 decimal place.)

Single server waiting line : A waiting line situation where every customer wait in the same line before being served by the same server is called a single server waiting line

How vectorcal could estimate the future indirect costs : How VectorCal could estimate the future indirect costs for at least ten potential line items related to the production of its navigation systems.

How much should you be willing to pay for the bond : You are considering a 15-year, $1,000 par value bond. Its coupon rate is 9%, and interest is paid semiannually. The data has been collected in the Microsoft.

User Account

All Pages