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Calculate the increase in Net income for each alternative if sales increased by $110,000 due to an increase in the number of units sold. Manual System Computerized System Increase in Net Income Which alternative would produce the higher net income?

Calculate the increase in Net income for each alternative if sales increased by $110,000 due to an increase in the number of units sold. Manual System Computerized System Increase in Net Income Which alternative would produce the higher net income?

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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Calculate the increase in Net income for each alternative if sales increased by $110,000 due to an increase in the number of units sold. Manual System Computerized System $ Increase in Net Income Which alternative would produce the higher net income?
Transcribed Image Text:Calculate the increase in Net income for each alternative if sales increased by $110,000 due to an increase in the number of units sold. Manual System Computerized System $ Increase in Net Income Which alternative would produce the higher net income?
Sheridan Modernas of Juarez, Mexico, is contemplating a major change in its cost structure. Currently, all of its drafting work is performed by skilled draftsmen. Rafael Jiminez, Sheridan's owner, is considering replacing the draftsmen with a computerized drafting system. However, before making the change, Rafael would like to know the consequences of the change, since the volume of business varies significantly from year to year. Shown below are CVP income statements for each alternative. Sales Variable costs Contribution margin Fixed costs Net income Manual System $1,560,000 1,248,000 312,000 72,000 $240,000 Computerized System $1,560,000 624,000 936,000 696,000 $240,000
Transcribed Image Text:Sheridan Modernas of Juarez, Mexico, is contemplating a major change in its cost structure. Currently, all of its drafting work is performed by skilled draftsmen. Rafael Jiminez, Sheridan's owner, is considering replacing the draftsmen with a computerized drafting system. However, before making the change, Rafael would like to know the consequences of the change, since the volume of business varies significantly from year to year. Shown below are CVP income statements for each alternative. Sales Variable costs Contribution margin Fixed costs Net income Manual System $1,560,000 1,248,000 312,000 72,000 $240,000 Computerized System $1,560,000 624,000 936,000 696,000 $240,000
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