Question
HiTech manufactures two products: Regular and Super. The results of operations for 20x1 follow Regular Super Total Units 10,000 3,700 1 3,700 Sales $240,000 $740,000
HiTech manufactures two products: Regular and Super. The results of operations for 20x1 follow
Regular Super Total
Units 10,000 3,700 1 3,700
Sales $240,000 $740,000 $980,000
Less: COGS 180,000 481,000 661,000
Gross Margin $60,000 $259,000 $319,000
Less: Selling Expenses 60,000 134,000 194,000
Operating Income $0 $125,000 $125,000
Fixed manufacturing costs included in cost of goods sold amount to $3 per unit for Regular and $20 per unit for Super. Variable selling expenses are $4 per unit for Regular and $20 per unit for Super; remaining selling amounts are fixed.
Disregard the information in the previous question. If HiTech eliminates Regular and uses the available capacity to produce and sell an additional 1,500 units of Super, what would be the impact on operating income?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started