Differential analysis, Managerial Accounting

Barker Company has a single product called a Zet. The company normally produces and sells 80,000 Zets 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 $ 9.50
Direct labor 10.00
Variable manufacturing overhead 2.80
Fixed manufacturing overhead 5.00 ($400,000 total)
Variable selling expenses 1.70
Fixed selling expenses 4.50 ($360,000 total)

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Total cost per unit $ 33.50

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------


--------------------------------------------------------------------------------


A number of questions relating to the production and sale of Zets are given below. Each question is
independent.

Required:
1.
Assume that Barker Company has sufficient capacity to produce 100,000 Zets each year without any increase in fixed manufacturing overhead costs. The company could increase sales by 25% above the present 80,000 units each year if it were willing to increase the fixed selling expenses by $150,000.
a. Calculate the incremental net operating income. (Negative amount should be indicated by a minus sign. Omit the "$" sign in your response.)

Incremental net operating income $
Posted Date: 11/20/2012 10:02:41 PM | Location : United States







Related Discussions:- Differential analysis, Assignment Help, Ask Question on Differential analysis, Get Answer, Expert's Help, Differential analysis Discussions

Write discussion on Differential analysis
Your posts are moderated
Related Questions
How much to order Supposing the estimated annual usage of a component by Machinery Ltd is 20,000 units.  Usage is even throughout the year and only one order per annum is place

importance of ratio analysis

Optimum Solution From the stand point of implementing the LP solution, the mathematical classification of the variables as basic and non-basic is of no importance and should be

Anderson Nuclear Power Plant will be "mothballed" at the end of its useful life (approximately 20 years) at great expense. The expense recognition principle requires that expenses

It is a commitment by a bank to lend a specific amount of funds on demand identifies the maximum amount of unsecured credit the bank will allow the customer to borrow at any time.

What story or character in a story generated what Aristotle calls a "catharsis?" Describe your emotional response. What specifically caused your emotional response?

Deposits from the public are one of the important sources of finance mainly for fine established big companies along with a vast capital base. The period of public deposits is rest

I need help making sure I did my accounting assignment correctly

After determining the amount of working capital as in above, a specific amount say 5 percent or 10 percent may be added to cover contingencies. This is to be noted that facts depen

What is the correct formula for Post Cost?