Question
Hi there, I really need the correct answers for each of these, dont need to show works 1, The management of Heider Corporation is considering
Hi there, I really need the correct answers for each of these, dont need to show works
1, The management of Heider Corporation is considering dropping product H58S. Data from the company's accounting system appear below: |
Sales | $970,000 |
Variable expenses | $393,000 |
Fixed manufacturing expenses | $375,000 |
Fixed selling and administrative expenses | $255,000 |
In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $243,000 of the fixed manufacturing expenses and $204,000 of the fixed selling and administrative expenses are avoidable if product H58S is discontinued. What would be the effect on the company's overall net operating income if product H58S were dropped? |
Overall net operating income would decrease by $53,000.
Overall net operating income would increase by $130,000.
Overall net operating income would increase by $53,000.
Overall net operating income would decrease by $130,000.
2, Barrus Corporation makes 43,000 motors to be used in the productions of its power lawn mowers. The average cost per motor at this level of activity is as follows: |
Direct materials | $10.20 |
Direct labor | $9.20 |
Variable manufacturing overhead | $3.80 |
Fixed manufacturing overhead | $4.75 |
This motor has recently become available from an outside supplier for $26.05 per motor. If Barrus decides not to make the motors, none of the fixed manufacturing overhead would be avoidable and there would be no other use for the facilities. If Barrus decides to continue making the motor, how much higher or lower will the company's net operating income be than if the motors are purchased from the outside supplier? Assume that direct labor is a variable cost in this company. |
$81,700 lower
$285,950 higher
$122,550 higher
$204,250 higher
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