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Richter Company has a single product called a Wim. The company normally produces and sells 87,000 Wims each year at a selling price of $40
Richter Company has a single product called a Wim. The company normally produces and sells 87,000 Wims each year at a selling price of $40 per unit. The company's unit costs at this level of activity are given below: Direct materials Direct labor Variable manufacturing overhea Fixed manufacturing overheac Variable selling expenses Fixed selling expenses $ 8.50 12.00 3.80 6.00 4.70 4.50 Total cost per unit $39.50 Anumber of questions relating to the production and sale of Wims are given below. Each question is independent. Required 1. Assume that Richter Company has sufficient capacity to produce 113,100 Wims each year without any increase in fixed manufacturing overhead costs. The company could increase sales by 30% above the present 87,000 units each year if it were willing to increase the fixed selling expenses by $130,000 a. Calculate the incremental net operating income. (Negative amount should be indicated by a minus sign.) Incremental net operating income$ 157,100
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