Question
Ozark Metal Company makes a single product that sells for $41.5 per unit. Variable costs are $28.1 per unit, and fixed costs total $65,165 per
Ozark Metal Company makes a single product that sells for $41.5 per unit. Variable costs are $28.1 per unit, and fixed costs total $65,165 per month. Assume that the firm adds another product to its product line and that the new product sells for $21 per unit, has variable costs of $14 per unit, and causes fixed expenses in total to increase to $81,000 per month. Calculate the firm's operating income if 6,100 units of the original product and 4,800 units of the new product are sold each month. For the original product, use the selling price and variable cost data given in the problem statement. Calculate the firm's operating income if 4,500 units of the original product and 6,400 units of the new product are sold each month. Why operating income is different in parts e and f, even though sales totaled 10,900 units in each case.
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