ch7 accounting wiley

question 3

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Sunland Chemical Corporation produces an oil-based chemical product which it sells to paint manufacturers. In 2022, the company incurred $399,040 of costs to produce 46,400 gallons of the chemical. The selling price of the chemical is $13.00 per gallon. The costs per unit to manufacture a gallon of the chemical are presented below: Direct materials $7.00 Direct labor 1.60 Variable manufacturing overhead 1.10 Fixed manufacturing overhead 0.80 Total manufacturing costs $10.50 The company is considering manufacturing the paint itself. If the company processes the chemical further and manufactures the paint itself, the following additional costs per gallon will be incurred: Direct materials $1.90, Direct labor $0.90, Variable manufacturing overhead $0.40. No increase in fixed manufacturing overhead is expected. The company can sell the paint at $16.50 per gallon. Determine the incremental per gallon increase in net income and the total increase in net income if the company manufactures the paint. (Round net income per unit value to 2 decimal places, e.g. 15.25.) Net incremental income per unit per unit Incremental net income Oriole Company operates a small factory in which it manufactures two products: A and B. Production and sales result for last year were as follow: A B Units sold 8,800 17,600 Selling price per unit 65 52 Unit variable cost 35 30 Unit fixed cost 15 15 For purposes of simplicity, the firm allocates total fixed costs over the total number of units of A and B produced and sold. The research department has developed a new product (C) as a replacement for product B. Market studies show that Oriole Company could sell 12,600 units of C next year at a unit selling price of $80. The unit variable cost of C is $39. The introduction of product C will lead to a 10% increase in demand for product A and discontinuation of product B. If the company does not introduce the new product, it expects next year's result to be the same as last year's. (a) Calculate the net profit before the introduction of Product C. Net Profit $ eTextbook and Media Save for Later Last saved 26 days ago. Saved work will be auto-submitted on the due date. Auto-submission can take up to 10 minutes