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Richter company has a single product called a wim the

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Richter Company has a single product called a Wim. The company normally produces and sells 87,000 Wims 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 $ 8.50
Direct labor
12.00
Variable manufacturing overhead
3.80
Fixed manufacturing overhead
6.00
Variable selling expenses
4.70
Fixed selling expenses
4.50

Total cost per unit $ 39.50

A number of questions relating to the production and sale of Wims are given below. Each question is
independent.
Required:
1.

Assume that Richter Company has sufficient capacity to produce 113,100 Wims each year without any increase in fixed manufacturing overhead costs. The company could increase sales by 30% above the present 87,000 units each year if it were willing to increase the fixed selling expenses by $130,000.
a. Calculate he incremental net operating income. (Negative amount should be indicated by a minus sign.)

Reference no: EM13607320

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