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At RM Sharpton Corporation, the engraving department is a bottleneck, and the company is considering hiring an extra worker, whose salary will be $45,000 per year, to mitigate the problem.With the extra worker, the company will be able to produce and sell 7,000 more units per year. The selling price per unit is $12. Cost per unit currently is $7 as follows:
Direct material..................$2.50Direct labor...................$75Variable overhead ..............................$25Fixed overhead (primarily depreciation of equipment)...$3.50Total......................$7.00
Required:
Calculate the annual financial impact of hiring the extra worker.
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What is Cost of Goods Sold? What job numbers likely relate to the balance in Cost of Goods Sold?
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