Calculate the operating income.

Type your answer...

Altac Manufacturing is considering two options to improve profitability: Option $1$: Invest in new manufacturing equipment that reduces direct labor costs by $20\%$ OR Option $2$: Increase the

selling price by $10\%$ to capture a larger market share.

Analyze each option separately and recommend the option that would yield the highest increase in net income. Present calculations and reasoning to support your recommendation. You

may also attach a document $($not required$)$ to support your response.

Edit View Insert Format Tools TableFinal Assessment

Managerial Accounting Final Assessment $-$ Cost Analysis and Decision Making

You may work on this assessment individually or with a classmate$/$classmates$!$ Each student must, however, submit their own assessment.

The objective of this managerial accounting final assessment is to validate your mastery of this course's student learning outcome "construct and analyze accounting and

other information for the purpose of making business decisions" by demonstrating your ability to analyze the cost structure and profitability of the fictional Altac

Manufacturing Company and to make informed business decisions based on the analysis.

Company Background:

Altac Manufacturing is a company that produces and sells a single product, the "TechThing." The TechThing is manufactured using a combination of labor and materials and is

sold to wholesalers and retailers. Altac Manufacturing operates in a highly competitive market, and management is constantly seeking opportunities to improve profitability.

Data Provided:

Sales Data:

Sales Price per TechThing: $$50$

Units Sold: $10,000$ TechThings

Manufacturing Data:

Direct Materials Cost per TechThing: $$10$

Direct Labor Cost per TechThing: $$8$

Fixed Manufacturing Overhead Costs: $$40,000$

Operating Expenses:

Selling Expenses: $$10,000$

Administrative Expenses: $$15,000$

NOTES:

Do not include dollar signs $($$$)$ in your answers.

Submit your final answer ONLY in the textboxes. DO NOT INCLUDE CALCULATIONS in your responses except for question $11.$

Be sure to use commas correctly and where appropriate. For example submit $15,000$ and NOT $15000.$