Question
The Lamar Company manufactures wiring tools. The company is currently producing well below its full capacity. The Boston Company has approached Lamar with an offer
The Lamar Company manufactures wiring tools. The company is currently producing well below its full capacity. The Boston Company has approached Lamar with an offer to buy 17,000 tools at $1.82 each. Lamar sells its tools wholesale for $1.92 each; the average cost per unit is $1.90, of which $0.34 is fixed costs. If Lamar were to accept Boston's offer, what would be the increase in Lamar's operating profits?
The King Company has two divisionsNorth and South. The divisions have the following revenues and expenses:
North | South | ||||||
Sales | $ | 950,000 | $ | 900,000 | |||
Variable expenses | 460,000 | 350,000 | |||||
Traceable fixed expenses | 270,000 | 220,000 | |||||
Allocated common corporate expenses | 260,000 | 200,000 | |||||
Net operating income (loss) | $ | (40,000 | ) | $ | 130,000 | ||
Management at King is pondering the elimination of North Division. If North Division were eliminated, its traceable fixed expenses could be avoided. The total common corporate expenses would be unaffected. Given these data, the elimination of North Division would result in an overall company net operating income of:
The operations of Winston Corporation are divided into the Blink Division and the Blur Division. Projections for the next year are as follows:
Blink Division | Blur Division | Total | |||||||||
Sales | $ | 290,000 | $ | 172,000 | $ | 462,000 | |||||
Variable costs | 100,000 | 79,000 | 179,000 | ||||||||
Contribution margin | $ | 190,000 | $ | 93,000 | $ | 283,000 | |||||
Direct fixed costs | 86,000 | 72,000 | 158,000 | ||||||||
Segment margin | $ | 104,000 | $ | 21,000 | $ | 125,000 | |||||
Allocated common costs | 41,000 | 33,500 | 74,500 | ||||||||
Operating income (loss) | $ | 63,000 | $ | (12,500 | ) | $ | 50,500 | ||||
Operating income for Winston Corporation, as a whole, if the Blur Division were dropped would be:
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