What will be the change in operating income next year

Assignment Help Managerial Accounting
Reference no: EM132593919

Bingham Company manufactures and sells Product J. Results for last year for the manufacture and sale of Product J are as follows:

Sales (10,000 units at $160 each) $1,600,000

Less: Costs; $960,000

Variable Production Costs $240,000

Sales Commisions -15% of Sales $195,000

Salaries of Line Supervisors $180,000

Traceable Fixed Factory Overhead (Allocated to product on the Basis of Square Meters Occupied) $170,000

Total Cost $1,745,000

Operating Income (Loss) $145,000

  • Bingham Company anticipates no change in the operating result for Product J in the foreseeable future if the product is produced. Bingham is re-examining all of its products and is trying to decide whether or not to discontinue the manufacture and sale of Product J. The company's total fixed factory overhead cost would not be affected by this decision.

Question 1: Assume that discontinuing Product J would result in a $30,000 increase in the contribution margin of other product lines. If Bingham chooses to discontinue Product J, what will be the change in operating income next year due to this action?

Reference no: EM132593919

Questions Cloud

What is the correct adjusted ending cash balance : Additionally, the bank statement showed service charges of $35. What is the correct adjusted ending cash balance
Calculate degree of financial leverage taken into account : Assuming that there is no preferred stock in capital structure, Calculate degree of financial leverage taken into account 50% tax rate
Different types of memory retrieval problems : There are many different types of memory retrieval problems. Tolman's maze running rats, Seligman's depressed dogs, Bandura & the bobo doll,
Define major components of a data warehouse architecture : Prompt 1 "Data Warehouse Architecture" (2-3 pages): Explain the major components of a data warehouse architecture, including the various forms of data transform
What will be the change in operating income next year : Bingham Company anticipates no change, If Bingham chooses to discontinue Product J, what will be the change in operating income next year due to this action?
Intensive care unit : It tells the story of three intensive care unit (ICU) nurses at Sanai-Grace Hospital in Detroit.
Explain why the problem requires data mining : Explain why the problem requires data mining, the general approach you plan to take, what kind of data you plan to use, and finally how you plan to get the data
What level is profit maximized : Analyze the pricing schedule that Milford is using-why might Milford offer a lower customer price at higher production levels. At what level is profit maximized
What happens to the organizational climate : What happens to the organizational climate when this resistance occurs and any tactics to reduce negative connotations when dealing with change.

Reviews

Write a Review

Managerial Accounting Questions & Answers

  Manage budgets and financial plans

Explain the budgeting process and its importance to a business, identifying the components of different budgets, forecast estimates for inclusion in the budgets.

  Prepare a retained earnings statement

Prepare a retained earnings statement for the year and Prepare a stockholders' equity section of given case.

  Prepare a master budget for the three-month period

Prepare a master budget for the three-month period.

  Construct the companys direct labor budget

Construct the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced.

  Evaluate the predetermined overhead rate

Evaluate the Predetermined Overhead Rate

  Determine the company''s bid

Determine the company's bid if activity-based costing is used and the bid is based upon full manufacturing cost plus 30 percent.

  Compute the pool rates for the different activities

Complete the schedule to compute the pool rates for the different activities.

  Prepare Company financial statements

Prepare Company financial statements

  Prepare an analysis of terracycles

This individual assignment is based on the TerraCycle Inc.

  Discuss the ethical issues

Discuss the ethical issues

  Political resources in emerging markets

Calculate the GDP in Income Approach  and Expenditure Approach

  Management accounting - ehsan electronics company

A new plant accountant suggested that the company may be able to assign support costs to products more accurately by using an activity based costing system that relies on a separate rate for each manufacturing activity that causes support costs.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd