Omar Industries manufactures two products: Regular and Super. The results of operations for 20x1 follow. Total Units Regular Super 13,000 3,900 $338,000 $819,000 260,000 468,000 Sales revenue 16,900 $1,157,000 728,000 Less: Cost of goods sold Gross Margin $ 78,000 $351,000 $ 429,000 78,000 280,000 Less: Selling expenses Operating income (loss). 358,000 71,000 $ 0 $ 71,000 $ Fixed manufacturing costs included in cost of goods sold amount to $3 per unit for Regular and $30 per unit for Super. Variable selling expenses are $4 per unit for Regular and $30 per unit for Super; remaining selling amounts are fixed. 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? Multiple Choice $0. $15,600 Increase. $26.000 Increase. $49.400 decrease. None of the answers is correct.
Omar Industries manufactures two products: Regular and Super. The results of operations for 20x1 follow. Total Units Regular Super 13,000 3,900 $338,000 $819,000 260,000 468,000 Sales revenue 16,900 $1,157,000 728,000 Less: Cost of goods sold Gross Margin $ 78,000 $351,000 $ 429,000 78,000 280,000 Less: Selling expenses Operating income (loss). 358,000 71,000 $ 0 $ 71,000 $ Fixed manufacturing costs included in cost of goods sold amount to $3 per unit for Regular and $30 per unit for Super. Variable selling expenses are $4 per unit for Regular and $30 per unit for Super; remaining selling amounts are fixed. 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? Multiple Choice $0. $15,600 Increase. $26.000 Increase. $49.400 decrease. None of the answers is correct.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education