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A yard tool manufacturer can produce either metal shovels or rakes. Given the following estimated operating data, use differential analysis to determine which product would result in the highest net income? Shovels Rakes 400,000 500,000 $60.00 $40.00 Units produced and sold Unit selling price Manufacturing costs: Variable (per unit) Fixed (total) Selling and administrative expenses: Variable (per unit) Fixed (total) $36.00 $18.00 $1,200,000 The manufacturer should produce: → Rakes Shovels $4.00 $4.00 Assume the manufacturer currently produces rakes. What are the incremental revenues and costs if the rakes are replaced with shovels? Incremental revenue: Revenue forgone on rakes Additional revenue from shovels price Incremental revenue Incremental costs: $280,000 $ Additional cost of goods sold Savings on rakes not produced Savings on selling and administrative Incremental costs Net differential cost of producing shovels $ $ $ 0 0 0 0 0 0 0 0 Microsoft Store Photos Media Engine Add-on Just got installed, check it out.

A yard tool manufacturer can produce either metal shovels or rakes. Given the following estimated operating data, use differential analysis to determine which product would result in the highest net income? Shovels Rakes 400,000 500,000 $60.00 $40.00 Units produced and sold Unit selling price Manufacturing costs: Variable (per unit) Fixed (total) Selling and administrative expenses: Variable (per unit) Fixed (total) $36.00 $18.00 $1,200,000 The manufacturer should produce: → Rakes Shovels $4.00 $4.00 Assume the manufacturer currently produces rakes. What are the incremental revenues and costs if the rakes are replaced with shovels? Incremental revenue: Revenue forgone on rakes Additional revenue from shovels price Incremental revenue Incremental costs: $280,000 $ Additional cost of goods sold Savings on rakes not produced Savings on selling and administrative Incremental costs Net differential cost of producing shovels $ $ $ 0 0 0 0 0 0 0 0 Microsoft Store Photos Media Engine Add-on Just got installed, check it out.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A yard tool manufacturer can produce either metal shovels or rakes. Given the following estimated operating data, use differential analysis to determine which product would result in the highest net income? Shovels Rakes 400,000 500,000 $60.00 $40.00 Units produced and sold Unit selling price Manufacturing costs: Variable (per unit) Fixed (total) Selling and administrative expenses: Variable (per unit) Fixed (total) $36.00 $18.00 $1,200,000 The manufacturer should produce: Rakes Shovels $4.00 $4.00 Assume the manufacturer currently produces rakes. What are the incremental revenues and costs if the rakes are replaced with shovels? Incremental revenue: Revenue forgone on rakes Additional revenue from shovels price Incremental revenue Incremental costs: Additional cost of goods sold Savings on rakes not produced Savings on selling and administrative Incremental costs Net differential cost of producing shovels $ $280,000 $ $ $ 0 0 0 0 O 0 0 0 HH Microsoft Store Photos Media Engine Add-on Just got installed, check it out.
Transcribed Image Text:A yard tool manufacturer can produce either metal shovels or rakes. Given the following estimated operating data, use differential analysis to determine which product would result in the highest net income? Shovels Rakes 400,000 500,000 $60.00 $40.00 Units produced and sold Unit selling price Manufacturing costs: Variable (per unit) Fixed (total) Selling and administrative expenses: Variable (per unit) Fixed (total) $36.00 $18.00 $1,200,000 The manufacturer should produce: Rakes Shovels $4.00 $4.00 Assume the manufacturer currently produces rakes. What are the incremental revenues and costs if the rakes are replaced with shovels? Incremental revenue: Revenue forgone on rakes Additional revenue from shovels price Incremental revenue Incremental costs: Additional cost of goods sold Savings on rakes not produced Savings on selling and administrative Incremental costs Net differential cost of producing shovels $ $280,000 $ $ $ 0 0 0 0 O 0 0 0 HH Microsoft Store Photos Media Engine Add-on Just got installed, check it out.
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