Question

Benace Parts and Supply makes a variety of car parts. The company produces 6,000 A90 parts each year. Each A90 sells for $12

0 0
Add a comment Improve this question Transcribed image text
Answer #1

The correct answer is D) decrease in total operating income of $ 28900

Explanation

Change in operating income if product A90 discontinued

= loss of contribution margin - saving in avoidable costs

= (6000×6)-7100

= $ 28900 loss due to discontinuation of Product A90

Add a comment
Know the answer?
Add Answer to:
Benace Parts and Supply makes a variety of car parts. The company produces 6,000 A90 parts...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • 11 value: 1.25 points Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been...

    11 value: 1.25 points Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experiencing losses on its bilge pump product line for several years. The most recent quarterly contribution format income statement for the bilge pump product line follows: Thalassines Kataskeves, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 Sales Variable expenses: Variable manufacturing $450,000 $139,000 48,000 12,000 expenses Sales commissions Shipping Total variable expenses 199,000 Contribution margin Fixed expenses: Advertising Depreciation of equipment (no...

  • 8. Brady Corporation (a multi-product company produces and sells 7.000 units of Product X each year....

    8. Brady Corporation (a multi-product company produces and sells 7.000 units of Product X each year. Each unit of Product X sells for $12 and has a contribution margin of $4. If Product Xis discontinued, $19,000 of the $32,000 in fixed costs charged to Product X could be eliminated. If Product X is discontinued, the company's overall operating income would: a) Decrease by $4,000 per year b) Increase by $9,000 per year c) Increase by $4,000 per year d) Decrease...

  • The managers of Riverside Designs are considering dropping one of their product lines. The product line...

    The managers of Riverside Designs are considering dropping one of their product lines. The product line typically has the following revenue and costs: Sales $125,000 Variable costs 85,000 Contribution margin 40,000 Fixed costs 45.000 Operating loss $ (5,000) If the product line is discontinued, $4,000 of the fixed costs would be avoided. Also, the freed-up capacity would generate $6,000 of additional contribution margin from the expansion of other product lines. If Riverside discontinues the product line, the effect on overall...

  • 28 Hill Fabricators manufactures a variety of parts that the company can use to produce metal...

    28 Hill Fabricators manufactures a variety of parts that the company can use to produce metal stud fixtures. The M2 part is a popular universal part used in the production of several other parts at its manufacturing facility in Ohio. Al a recent meeting, the managerial accountant reported that 11% of its fixed overhead cots assigned to the M2 part will not continue if Hill Fabricators decides to outsource the production of the M2 part at $43 per unit to...

  • Gallerani Corporation has received a request for a special order of 4,200 units of product A90...

    Gallerani Corporation has received a request for a special order of 4,200 units of product A90 for $26.80 each. Product A90's unit product cost is $26.20, determined as follows: $ Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost 2.50 7.80 6.90 9.00 $26.20 Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product A90...

  • Beta makes product A & product B. Recent performance data is as follows: A (based on sales of 100 units) B (b...

    Beta makes product A & product B. Recent performance data is as follows: A (based on sales of 100 units) B (based on sales of 100 units) Company Total Sales Revenue 800 500 1300 -VC (400) (200) (600) =CM 400 300 700 -FC (600) (200) (800) =Oper. Income (200) 100 (100) 4) If Beta discontinues the A product line, what will be the effect on total company operating income? Assume all A fixed costs are avoidable if he discontinues it....

  • Cawley Company makes three models of tasers. Information on the three products is given below. Tingler...

    Cawley Company makes three models of tasers. Information on the three products is given below. Tingler Shocker Stunner Sales $306,000 $494,000 $200,000 Variable expenses 154,900 203,300 135,200 Contribution margin 151,100 290,700 64,800 Fixed expenses 119,964 224,736 93,700 Net income $31,136 $65,964 $(28,900) Fixed expenses consist of $294,000 of common costs allocated to the three products based on relative sales, as well as direct fixed expenses unique to each model of $30,000 (Tingler), $79,500 (Shocker), and $34,900 (Stunner). The common costs...

  • 12. Galesburg Company makes a variety of paper products. One product is 20 pound copier paper,...

    12. Galesburg Company makes a variety of paper products. One product is 20 pound copier paper, packaged 5,000 sheets to a box. One box normally sells for $18. A large bank offered to purchase 3,000 boxes at $14 per box. Costs per box are as follows. 8.00 GALESBURG COMPANY COSTS PER BOX FOR 20 POUND COPIER PAPER Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead 3.00 1.00 5.00 No variable marketing costs would be incurred on the order...

  • Colortrigon Company makes a variety of paper products. One product is 30 lb copier paper, packaged...

    Colortrigon Company makes a variety of paper products. One product is 30 lb copier paper, packaged 3,000 sheets to a box. One box normally sells for $20. A large bank offered to purchase 6,000 boxes at $15 per box. Costs per box are as follows: $6 Direct materials Direct labor Variable overhead Flxed overhead No variable marketing costs would be incurred on the order. The company is operating significantly below the maximum productive capacity. No fixed costs are avoidable. Should...

  • Clarington Company makes three models of phasers. Information on the three products is given below: Sales...

    Clarington Company makes three models of phasers. Information on the three products is given below: Sales Variable expenses Contribution margin Stunner $298,000 146,000 152,000 118,000 Double-Set $447,000 198,500 248,500 205,700 $42,800 Mega-Power $186,250 138,000 48,250 83,800 Fixed expenses Net income $34,000 ($35,550) Fixed expenses consist of $273,000 of common costs allocated to the three products based on relative sales, and additional fixed expenses of $30,000 (Stunner), $75,300 (Double-Set), and $29,200 (Mega-Power). The common costs will be incurred regardless of how...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT