Nancy's Kreations just completed its best year, generating income of $61,000 from selling decadent wedding cakes and desserts. For a business that is only two years oldand run from Nancy's own kitchen, this is quite an accomplishment. She has been asked to provide a special-event cake for one event per month at the local conventioncenter, but at a reduced price of $400.While this is mostly fantastic news, Nancy realizes that she is already working at maximum capacity. If she commits to these events, she will need to either find additionalcapacity or reduce her regular wedding cake sales. The following income statement shows Nancy's results from last year.Sales$230,000COGS124,000트플Gross margin106,000Operating expenses45,000Operating income$61,000SUPPORTNancy's average selling price is $1,000 per cake; fixed-MOH costs are $66,500 and are included in COGS. All other product costs vary based on volume. Average variableoperating expenses are $107 per cake; remaining operating expenses are fixed. After thinking about it further, she realizes she'll avoid the variable operating expenses onthe special-event cakes. TalTo keep her existing sales volume and take on the new convention center events, Nancy would need to hire additional employees who would "invade" her home whileshe and her family sleep. Hiring dependable night-shift workers would increase her variable product costs per unit by 20%. If she maintains her existing sales and takeson the new events under these circumstances, how much total operating income will she show for next year?Total operating income$

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To keep her existing sales volume and take on the new convention center events, Nancy would need to hire additional employees who would "invade" her home while she and her family sleep. Hiring dependable night-shift workers would increase her variable product costs per unit by 20%. If she maintains her existing sales and takes on the new events under these circumstances, how much total operating income will she show for next year? Total operating income $

To keep her existing sales volume and take on the new convention center events, Nancy would need to hire additional employees who would "invade" her home while she and her family sleep. Hiring dependable night-shift workers would increase her variable product costs per unit by 20%. If she maintains her existing sales and takes on the new events under these circumstances, how much total operating income will she show for next year? Total operating income $

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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