Maxim has already spent $28,100 to manufacture a hamster food product called Green Health. Maxim currently has 10,000 bags of Green Health on hand that can be sold for $90,320. Alternatively, Maxim can process it further into a different product, Premium Green, at an additional cost of $6,025. If Maxim processes further, the Premium Green can be sold for $98,350. The incremental income to process further is: Multiple Choice $3,005 $2,005 $8,030. $(8,030) $2.005)

Maxim has already spent $28,100 to manufacture a hamster food product called Green Health. Maxim currently has 10,000 bags of Green Health on hand that can be sold for $90,320. Alternatively, Maxim can process it further into a different product, Premium Green, at an additional cost of $6,025. If Maxim processes further, the Premium Green can be sold for $98,350. The incremental income to process further is: Multiple Choice $3,005 $2,005 $8,030. $(8,030) $2.005)

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 6EB: Country Diner currently makes cookies for its boxed lunches. It uses 40,000 cookies annually in the...

See similar textbooks

Similar questions

Lim has already spent $30,700 to manufacture a hamster food product called Pet Health. Lim currently has 10,000 bags of Pet Health on hand that can be sold for $94,480. Alternatively, Lim can process it further into a different product, Premium Pet, at an additional cost of $6,350. If Lim processes further, the Premium Pet can be sold for $102,900. This would result in revenue of: Multiple Choice $102,900. $100,830. $8,420. $2,070. $6,350.
Holiday Corporation has two divisions, Quail and Marlin. Quail produces a widget that Marlin could use in its production. Quail's variable costs are $4.30 per widget while the full cost is $7.30. Widgets sell on the open market for $12.60 each. If Quail has excess capacity, what would be the minimum transfer price if Marlin currently is purchasing 115,000 units on the open market? Multiple Choice $5.30 $4.30 $12.60 $7.30
Saran Company has contacted Truckel with an offer to sell it 5,000 of the wickets for $18 each. If Truckel makes the wickets, variable costs are $16 per unit. Fixed costs are $8 per unit; however, $5 per unit is unavoidable. Should Truckel make or buy the wickets? a. Buy; savings = $15,000 b. Buy; savings = $5,000 c. Make; savings = $10,000 d. Make; savings = $5,000
Coronado Makeup produces face cream. Each bottle of face cream costs $12 to produce and can be sold for $13. The bottles can be sold as is, or processed further into sunscreen at a cost of $14 each. Coronado Makeup could sell the sunscreen bottles for $23 each. What should Coronado Makeup do? Face cream must be further processed because it increases operating income by $1 each. O Face cream must not be further processed because incremental revenue is less than incremental processing costs. O Face cream must be further processed because its operating income is $9 each. Face cream must not be further processed because it decreases operating income by $3 each.
Sweet Taste has the capacity to produce either 45,000 corncob pipes or 21,000 cornhusk dolls per year. The pipes cost $3.00 each to produce and sell for $7.50 each. The dolls sell for $10.00 each and cost $4.00 to produce. Required Calculate the contribution margin per unit and the total contribution margin for Pipes and Dolls. Assuming that Sweet Taste can sell all it produces of either product, should it produce the corncob pipes or the cornhusk dolls? (Round "Contribution margin per unit" answers to 2 decimal places.) Please don't provide answer in image format thank you
Country Diner currently makes cookies for its boxed lunches. It uses 40,000 cookies annually in the production of the boxed lunches. The costs to make the cookies are: A potential supplier has offered to sell Country Diner the cookies for $0.85 each. If the cookies are purchased, 10% of the fixed overhead could be avoided. If Jason accepts the offer, what will the effect on profit be?
Reubens Deli currently makes rolls for deli sandwiches it produces. It uses 30,000 rolls annually in the production of deli sandwiches. The costs to make the rolls are: A potential supplier has offered to sell Reuben the rolls for $0.90 each. If the rolls are purchased, 30% of the fixed overhead could be avoided, If Reuben accepts the offer, what will the effect on profit be?
Mortech makes digital cameras for drones. Their basic digital camera uses $80 in variable costs and requires $1,500 per month in fixed costs. Mortech sells 200 cameras per month. If they process the camera further to enhance its functionality, it will require an additional $45 per unit of variable costs, plus an increase in fixed costs of $1,000 per month. The current price of the camera is $200. The marketing manager is positive that they can sell more and charge a higher price for the improved version. At what price level would the upgraded camera begin to improve operational earnings?
Syntech makes digital cameras for drones. Their basic digital camera uses $80 in variable costs and requires $1,500 per month in fixed costs. Syntech sells 100 cameras per month. If they process the camera further to enhance its functionality, it will require an additional $45 per unit of variable costs, plus an increase in fixed costs of $1,000 per month. The current price of the camera is $160. The marketing manager is positive that they can sell more and charge a higher price for the improved version. At what price level would the upgraded camera begin to improve operational earnings?
Jansen Crafters has the capacity to produce 50,000 oak shelves per year and is currently selling 44,000 shelves for $32 each. Cutrate Furniture approached Jansen about buying 1,200 shelves for bookcases it is building and is willing to pay $26 for each shelf. No packaging will be required for the bulk order. Jansen usually packages shelves for Home Depot at a price of $1.50 per shell. The $1.50 per-shelf cost is included in the unit variable cost of $27, with annual fixed costs of $320.000. However, the $130 packaging cost will not apply in this case. The fixed costs will be unaffected by the special order and the company has the capacity to accept the order. Based on this information, what would be the profit if Jansen accepts the special order? A. Profits will decrease by $1,200. B. Profits will increase by $31,200. C. Profits will increase by $600. D. Profits will increase by $7,200.
Google manufactures Nest Hello smart doorbells and sells them to intermediaries in the channel of distribution for $75. Each doorbell costs Google $20 to manufacture in addition to $750,000 in fixed costs. Calculate the following: contribution per unit and contribution margin percentage break-even volume in units and dollars unit volume and dollar sales necessary if Google’s profit goal is $8 million unit volume and dollar sales necessary if Google’s profit goal is 20% profit on sales
Cox Electric makes electronic components and has estimated the following for a new design of one of its products: Fixed Cost $10,000 Material cost per unit = $0.15 Labor cost per unit = $0.10 Revenue per unit = $0.65 Show Transcribed Text Implement your model from part (b) in Excel using the principles of good spreadsheet design and find the profit if Cox Electric makes 18,000 new product. If required, round your answer to nearest whole number. For subtractive or negative numbers use a minus sign. (Example: -300)