Omar Industries manufactures two products: Regular and Super. The results of operations for 20x1 follow.UnitsRegular10,000Sales revenueLess: Cost of goods sold$ 240,000180,000Gross MarginLess: Selling expensesOperating income (loss)$ 60,00060,000$ 0Super3,700$740,000481,000$ 259,000134,000Total13,700$ 980,000661,000$ 319,000194,000$ 125,000$ 125,000Fixed 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 $4per unit for Regular and $20 per unit for Super; remaining selling amounts are fixed.Omar Industries wants to drop the Regular product line. If the line is dropped, company-wide fixed manufacturing costs would fall by 10% because thereis no alternative use of the facilities. What would be the impact on operating income if Regular is discontinued?Multiple Choice$10,400 increase

Answered: Omar Industries manufactures two…

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter12: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 12.16E: Product cost concept of product pricing Based on the data presented in Exercise 12-15, assume that...

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Garrett Company provided the following information: Common fixed cost totaled 46,000. Garrett allocates common fixed cost to Product 1 and Product 2 on the basis of sales. If Product 2 is dropped, which of the following is true? a. Sales will increase by 300,000. b. Overall operating income will increase by 2,600. c. Overall operating income will decrease by 25,000. d. Overall operating income will not change. e. Common fixed cost will decrease by 27,600.
Starling Co. manufactures one product with a selling price of 18 and variable cost of 12. Starlings total annual fixed costs are 38,400. If operating income last year was 28,800, what was the number of units Starling sold? a. 4,800 b. 6,400 c. 5,600 d. 11,200
Use the following information for Multiple- Choice Questions 2-13 through 2-18: Last year, Barnard Company incurred the following costs: Barnard produced and sold 10,000 units at a price of 31 each. 2-15 Refer to the information for Barnard Company on the previous page. The cost of goods sold per unit is a. 7.00. b. 20.00. c. 15.00. d. 5.00. e. 27.60.
The following information is available for Cooke Company for the current year: The gross margin is 40% of net sales. What is the cost of goods available for sale? a. 5840,000 b. 960,000 c. 1,200,000 d. 1,220,000
Product cost concept of product pricing Based on the data presented in Exercise 12-15, assume that Willis Products Inc. uses the product cost concept of applying the cost-plus approach to product pricing. a.Determine the total manufacturing costs and the cost amount per unit for the production and sale of 200,000 units. b.Determine the product cost markup percentage per unit. Round to two decimal place. c.Determine the selling price per unit. Round to the nearest dollar.
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Low-Tek Manufacturing Incorporated makes two types of industrial component parts - the B300 and the T500. The Income Statement for the most recent period is shown below: Low-Tek Manufacturing Incorporated Income Statement Sales Cost of goods sold Gross profit P2,100,000 1,600,000 500,000 550,000 Selling and administrative expenses Net operating loss P(50,000) Low-Tek produced and sold 70,000 units of B300 at a price of P20 per unit and 17,500 units of T500 at a price of P40 per unit. The company's traditional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labor cost as the allocation based. Additional information relating to the company's two product lines is shown below: T500 TOTAL B300 P436,300 P251,700 P688,000 Direct materials Direct labor P200,000 P104,000 304,000 Manufacturing overhead Cost of goods sold 608,000 P1,600,000 The company has created an activity -based costing system to evaluate the profitability of its products.…
Pinta Company produces and sells two products, Ballpen and Sign Pen. Presented below are the financial figures in the production and sale of Pinta Company Sales in units (box) Ballpen Sign Pen Total 3,000 2,000 5,000 Sales P350,000.00 P400,000.00 P750,000.00 VC 100,000.00 250,000.00 350,000.00 CM 250,000.00 150,000.00 400,000.00 FX 120,000.00 NI 280,000.00 Required: How many units of Ballpen should be sold next month to break even? How many units of Ph Sign Pen should be sold to earn a profit of P300,000.00? How many units of Ph Sign Pen should be sold to earn a profit of P150,000 net of 35% tax?
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According to 3 different types of businesses;(total fixed expense 120,000)X product40 pieces, unit selling price 5000, unit variable expense 2000Y product25 units, unit selling price 1600, unit variable expense 1000Z product100 units, unit selling price 1000, unit variable expense 800 What is the breakeven point amount of the business?
Omar Industries manufactures two products: Regular and Super. The results of operations for 20x1 follow. Regular Super Total Units 16,000 3,000 19,000 Sales revenue $ 352,000 $ 690,000 $ 1,042,000 Less: Cost of goods sold 252,000 420,000 672,000 Gross Margin $ 100,000 $ 270,000 $ 370,000 Less: Selling expenses 100,000 143,000 243,000 Operating income (loss) $ 0 $ 127,000 $ 127,000 Fixed manufacturing costs included in cost of goods sold amount to $2 per unit for Regular and $15 per unit for Super. Variable selling expenses are $3 per unit for Regular and $15 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 1,600 units of Super, what would be the impact on operating income?
Choose the correct letter of answer In 20x2 the Cranky Processing Company had the following data coming from its income statement (in Pesos): Sales, P1,200,000; Variable costs: (a) Goods sold, P400,000 and (b) S&A Expenses, P100,000; Fixed costs: (a) Factory overhead, P110,000, and S&A Expenses, P80,000. Income tax rate is 15%. Determine the required peso sales to provide an after-tax net income of P150,000. a. P261,765b. P176,471c. P366,471d. P628,235

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