Frannie Fans currently manufactures ceiling fans that include remotes to operate them. The current cost to manufacture 10,360 remotes is as follows: Cost Direct materials Direct labor Variable overhead Fixed overhead Total $ 67,340 $ 56,980 $ 31,080 $ 51,800 $ 207,200 Frannie is approached by Lincoln Company which offers to make the remotes for $18 per unit. Required: 1. Compute the difference in cost between making and buying the remotes if none of the fixe costs can be avoided. What is the change in net income? 2. Compute the difference in cost between making and buying the remotes if $20,720 of the fixed costs can be avoided. What is the change in net income? 3. What is the change in net income if fixed cost of $20,720 can be avoided and Frannie could rent out the factory space no longer in use for $20,720? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the difference in cost between making and buying the remotes if none of the fixed costs can be avoided. What is the change in net income? per unit Difference in cost Change in net income decrease Required Required 2 > Frannie Fans currently manufactures ceiling fans that include remotes to operate them. The current cost to manufacture 10,360 remotes is as follows: Cost Direct materials Direct labor Variable overhead Fixed overhead Total $ 67,340 $ 56,980 $ 31,080 $ 51,800 $ 207,200 Frannie is approached by Lincoln Company which offers to make the remotes for $18 per unit. Required: 1. Compute the difference in cost between making and buying the remotes if none of the fixed costs can be avoided. What is the change in net income? 2. Compute the difference in cost between making and buying the remotes if $20,720 of the fixed costs can be avoided. What is the change in net income? 3. What is the change in net income if fixed cost of $20,720 can be avoided and Frannie could rent out the factory space no longer in use for $20,720? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the difference in cost between making and buying the remotes if $20,720 of the fixed costs can be avoided. What is the change in net income? per unit Difference in cost Change in net income decrease Anderson Publishing has two divisions: Book Publishing & Magazine Publishing. The Magazine division has been losing money for the last 5 years and Anderson is considering eliminating that division, Anderson's information about the two divisions is as follows: Book Division $ 8,120,000 Magazine Division $ 3,435,400 Total $11,555,400 Sales Revenue Cost of Goods sold Variable costs Fixed costs Gross Profit Operating Expenses Variable Fixed Net income 2,320,000 1,109,500 $ 4,690,500 1, 156,500 1,282,400 $ 996,500 3,476,500 2,391,900 $ 5,687,888 167,000 2,948,000 $ 1,575,500 244,900 411,900 1,206,980 4,154,900 $ (455,380) $ 1,120,200 Only 20 percent of the fixed manufacturing costs and 60 percent of the fixed operating expenses are directly attribute to each division. The remainder are common or shared between the two divisions. Required: 1. Present the financial information in the form of a segmented income statement (using the contribution margin approach). 2. What will be the impact on net income if the Magazine Division is eliminated? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Present the financial Information in the form of a segmented income statement (using the contribution margin approach). Magazine Book Division Total Division Sales revenue Variable costs Cost of goods sold Operating expenses Contribution margin Direct fixed costs Common fixed costs Not income (los) Anderson Publishing has two divisions: Book Publishing & Magazine Publishing. The Magazine division has been losing money for the last 5 years and Anderson is considering eliminating that division. Anderson's Information about the two divisions is as follows: Magazine Book Division Division Total Sales Revenue $ 8,120,000 $ 3,435,400 $11,555,400 Cost of Goods sold Variable costs 2,320,000 1,156,500 3,476,500 Fixed costs 1,109,500 1,282,400 2,391,900 Gross Profit $ 4,690,500 $ 996,5ee $ 5,687, eee Operating Expenses Variable 167,000 244,900 411,900 Fixed 2,948,000 1,286,900 4,154,900 Net income $ 1,575,500 $ (455,300) $ 1,120,200 Only 20 percent of the fixed manufacturing costs and 60 percent of the fixed operating expenses are directly attribute to each division. The remainder are common or shared between the two divisions. Required: 1. Present the financial information in the form of a segmented income statement (using the contribution margin approach). 2. What will be the impact on net income if the Magazine Division is eliminated? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What will be the impact on net income if the Magazine Division is eliminated? Impact on net income decrease
