Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Omar Industries manufactures two products: Regular and Super. The results of operations for 20x1 follow. Regular Super Total Units 10,000 4,000 14,000 Sales revenue $
Omar Industries manufactures two products: Regular and Super. The results of operations for 20x1 follow.
Regular | Super | Total | |||||||||
Units | 10,000 | 4,000 | 14,000 | ||||||||
Sales revenue | $ | 340,000 | $ | 960,000 | $ | 1,300,000 | |||||
Less: Cost of goods sold | 260,000 | 480,000 | 740,000 | ||||||||
Gross Margin | $ | 80,000 | $ | 480,000 | $ | 560,000 | |||||
Less: Selling expenses | 80,000 | 144,000 | 224,000 | ||||||||
Operating income (loss) | $ | 0 | $ | 336,000 | $ | 336,000 | |||||
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. If Omar Industries eliminates Regular and uses the available capacity to produce and sell an additional 1,000 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