Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Fruit Computer Company makes special fruit themed computers. Each unit sells for $410. Fruit Computer Company produces and sells 12,500 units per year. They have

image text in transcribed

Fruit Computer Company makes special fruit themed computers. Each unit sells for $410. Fruit Computer Company produces and sells 12,500 units per year. They have provided the following income statement data: $5,125,000 Traditional Format Revenue Cost of goods sold Gross profit Selling & admin. expenses Contribution Format $5,125,000 Revenue 2.900,000 Variable costs: 2,225,000 Manufacturing 900,000 300.000 3,925,000 560,000 Selling & admin. Contribution margin Fixed costs: Manufacturing Selling & admin. $1,665,000 Operating income 2,000,000 260,000 $1.665.000 Operating income A foreign company has offered to buy 85 units for a reduced sales price of $320 per unit. The marketing manager says the sale will not affect the company's regular sales. The sales manager says that this sale will require variable selling and administrative costs. The production manager reports that it would require an additional $20,000 of fixed manufacturing costs to accommodate the specifications of the buyer. If Fruit Computer Company accepts the deal, how will this impact operating income? (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.) Operating income will decrease by $960. Operating income will increase by $960. Operating income will increase by $27,200. O Operating income will decrease by $19,040

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

ISE Managerial Accounting

Authors: Ray H. Garrison, Eric Noreen, Peter C. Brewer

17th Edition

1260575683, 9781260575682

More Books

Students also viewed these Accounting questions

Question

Understand links between the university business model and HRM.

Answered: 1 week ago