Omar Industries manufactures two products: Regular and Super. The results of operations for 20x1 follow.UnitsRegular10,000Sales revenueLess: Cost of goods sold$ 240,000180,000Gross MarginLess: Selling expensesOperating income (loss)$ 60,00060,000$ 0Super3,700$740,000481,000$ 259,000134,000Total13,700$ 980,000661,000$ 319,000194,000$ 125,000$ 125,000Fixed 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 $4per unit for Regular and $20 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 thereis no alternative use of the facilities. What would be the impact on operating income if Regular is discontinued?Multiple Choice$10,400 increase

Answered: Omar Industries manufactures two…

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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Maryland Novelties Company produces and sells souvenir products. Monthly income statements for two activity levels are provided below: Unit volumes Revenue Less cost of goods sold Gross margin Less operating expenses Salaries and commissions Advertising expenses Administrative expenses Total operating expenses Net income Required 22,000 units $ 165,000 66,000 $ 99,000 22,000 33,000 13,750 68,750 $ 30,250 Required A Required B Required C 33,000 units $ 247,500 99,000 $ 148,500 a. Identify each of the following expenses as fixed, variable, or mixed. b. Use the high-low method to separate the mixed costs into variable and fixed components. c. Prepare a contribution margin income statement at the 22,000-unit level. 27,500 33,000 13,750 74,250 $ 74,250 Complete this question by entering your answers in the tabs below.
Show Me How Question Content Area Break-Even Sales Under Present and Proposed Conditions Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $188 per unit during the current year. Its income statement is as follows: Sales $188,000,000 Cost of goods sold (99,000,000) Gross profit $89,000,000 Expenses: Selling expenses $15,000,000 Administrative expenses 14,900,000 Total expenses (29,900,000) Operating income $59,100,000 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 70% 30% Selling expenses 75% 25% Administrative expenses 50% 50% Management is considering a plant expansion program for the following year that will permit an increase of $11,280,000 in yearly sales. The expansion will increase fixed costs by $3,500,000 but will not affect the relationship between sales and variable costs.Determine the maximum operating income…
The following information pertains to Morrow’s Mannequins: Manufacturing Cost $2,170,000 Unites Manufactured 32,000 Unites Sold 28,500 units sold for $90 per unit Beginning inventory 0 units What is the amount of gross margin? $270,000 $2,170,000 $1,995,000 $632,344
Company Q produces and sells 50 products. However, TWO products remain the best sellers. Of TOTAL sales, Product X accounts for 35%, and Product Y represents 45%. The remaining "Other" products are grouped into a single category. Consider the following information: Products X Y Other $60.00 $30.00: $50.00: Sale price per unit Variable expenses per unit Total fixed expenses $25.00 $15.00 $30.00 $1,575,000 Compute Sales (in units) for Product Y at Breakeven
Evans Company reported the following: Manufacturing costs Units manufactured Units sold Beginning inventory $2,385,000 53,000 40,000 units sold for $100 per unit O units What is the amount of gross profit margin? $2,915,000 $4,000,000 $1,615,000 $2,200,000
Hancock Company manufactures and sells two lines of furniture, case goods and upholstery, During the most recent accounting period, the Case Goods and Upholstery Divisions sold 17,400 and 2,360 units, respectively. The company's most recent financial statements are shown below. Sales Less cost of goods sold: Unit-level production cost Depreciation, production equipment Gross margin Less operating expenses: Case Goods Upholstery $1,852,000 $472,000 1,156,000 276,000 $420,000 283,200 70,800 $118,000 Unit-level selling and administrative costs Corporate-level facility expenses (fixed) Net income (loss) If unit sales for both divisions increased 10% the company would report which of the following? 69,600 64,000 $286,400 59,000 64,000 $(5,000)
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