What would be the impact on operating income

Assignment Help Managerial Accounting
Reference no: EM133095793

Question - Omar Industries manufactures two products: Regular and Super. The results of operations for 20x1 follow.

 

Regular

Super

Total

Units

10,000

3,700

13,700

Sales revenue

$240,000

$740,000

$980,000

Less: Cost of goods sold

180,000

481,000

661,000

Gross Margin

$60,000

$259,000

$319,000

Less: Selling expenses

60,000

134,000

194,000

Operating income (loss)

$0

$125,000

$125,000

Fixed manufacturing costs included in cost of goods sold amount to $3 per unit for Regular and $20 per unit for Super. Variable selling expenses are $4 per unit for Regular and $20 per unit for Super; remaining selling amounts are fixed.

Required -

1. Omar Industries wants to drop the Regular product line. If the line is dropped, company-wide fixed manufacturing costs would fall by 10% because there is no alternative use of the facilities. What would be the impact on operating income if Regular is discontinued?

2. Disregard the information in the previous question. If Omar Industries eliminates Regular and uses the available capacity to produce and sell an additional 1,500 units of Super, what would be the impact on operating income?

Reference no: EM133095793

Questions Cloud

Question of human resources management : Please help me out for solving this question of human resources management subject as soon as possible. Demand forecasting is a quantitative aspect of human res
Collective bargaining negotiations : 1) You have been called in to act as a labor consultant to a private sector hospital in upcoming collective bargaining negotiations with its union.
How much is the adjustment on the furniture net account : How much is the adjustment on the furniture net account balance in the December 31, 2016 consolidated financial statements
What is the total cost : What is the total cost if the equipment will be replaced? Consider that old machine can be sold. Use comma as necessary
What would be the impact on operating income : Fixed manufacturing costs included in cost of goods sold amount to $3 per unit for Regular and $20 per unit for Super. What would be impact on operating income
How much is the total amount of deductions : The books of accounts of MORENO's Company showed the following: Fringe benefits expense P750,000. How much is the total amount of deductions
The aging adult : Discuss the physical changes that occur in late adult hood. Explain the cognitive changed that occur in late adult hood.
What is the beginning inventory : Cost of sales was Php 120,000 and the desired ending inventory was Php 42,000. What is the beginning inventory
Calculate the weighted-average accumulated expenditures : To finance the cost of construction, $50,000 was borrowed on January 1 on a 4%, three-year note payable. Calculate the weighted-average accumulated expenditures

Reviews

Write a Review

Managerial Accounting Questions & Answers

  Manage budgets and financial plans

Explain the budgeting process and its importance to a business, identifying the components of different budgets, forecast estimates for inclusion in the budgets.

  Prepare a retained earnings statement

Prepare a retained earnings statement for the year and Prepare a stockholders' equity section of given case.

  Prepare a master budget for the three-month period

Prepare a master budget for the three-month period.

  Construct the companys direct labor budget

Construct the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced.

  Evaluate the predetermined overhead rate

Evaluate the Predetermined Overhead Rate

  Determine the company''s bid

Determine the company's bid if activity-based costing is used and the bid is based upon full manufacturing cost plus 30 percent.

  Compute the pool rates for the different activities

Complete the schedule to compute the pool rates for the different activities.

  Prepare Company financial statements

Prepare Company financial statements

  Prepare an analysis of terracycles

This individual assignment is based on the TerraCycle Inc.

  Discuss the ethical issues

Discuss the ethical issues

  Political resources in emerging markets

Calculate the GDP in Income Approach  and Expenditure Approach

  Management accounting - ehsan electronics company

A new plant accountant suggested that the company may be able to assign support costs to products more accurately by using an activity based costing system that relies on a separate rate for each manufacturing activity that causes support costs.

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