OMEGA WIDGET MANUFACTURERS Omega Widget Manufacturers has variable costs (of making 10,000 widgets) that equals $20 per widget. Total fixed costs for Omega equal $100,000. Currently the sales price is $32 per widget (Next year's anticipated sales = 10,000 units) During the budgeting process, Manager Abel recommends continuing production at 10,000 units- Manager Belzos recommends manufacturing 12,500 units. Supervisor Wylie, who is the production line supervisor, and up for a promotion to manager of Omega's Lanai, Hawaii factory, and also gets a bonus equal to 5% of the product line's net income just "demands the production amount be 16,000 units- (There is enough productive capacity to make 16,000 units.) Omega has no selling expenses or general expenses.)

INSTRUCTIONS: 0 1. Make out a regular financial accounting income statement pretending each proposal were used.

2. Make comments on the results and how they compare.

3- Make out variable costing income statements for all 3 proposals. Bonita Corporation has suggested they wiIl buy 3,000 widgets but are only willing to pay $25 per unit. Omega has the capacity to fiII the order. Fixed costs will stay the same. Can you solve this without doing income statements? (Hint: use contribution margin.)