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?
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
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?
Trending now
This is a popular solution!
Step by step
Solved in 1 steps
