Omar Industries manufactures two products: Regular and Super. The results of operationsfor 20x1 follow Regul ar10,000Super3,700Tot al13,700UnitsSales revenue$ 240,000 S 740,000 $ 980,000481,000Less: Cost of goods soldGross MarginLess: Selling expensesOperating in come (loss)180,000661.000$ 60,000 S 259,000 $ 319,000194,00060,000134,000soS 125,000 S 125,000Fixed manufacturing costs included in cost of goods sold amount to $3 p er unit for Regularand $20 per unit for Super. Variable selling expenses are $4 per unit for Regular and $20per 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 ofthe facilities. What would be the impact on op erating income if Regular is di scontinued?a. $0.b. $10,400 increase.c. $20,000 increase.d. $39,600 decrease.e. None of the answers is correct.

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Answered: What would be the impact on op er ating…

Business

Accounting

What would be the impact on op er ating income if Regular is discontinued?

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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