Question

Marston Corporation makes a special-purpose machine, D4H, used in the textile industry. Marston has designed the D4H machine for 2017 to be distinct from its competitors. It has been generally regarded as a superior machine. Marston presents the following data for 2016 and 2017. (Click the icon to view the data.) (Click the icon to view additional information.) Read the requirements.

Answer 1

	2016
Revenues (200 x $37,000)	$7,400,000
Costs
Direct material costs (320,000 x $7.25)	$2,320,000
Manufacturing conversion costs (200 x $8,100)	$1,620,000
Selling and customer service cost (77 x $11,000)	$1,100,000
Total costs	$5,040,000
Operating income	$2,360,000
	2017
Revenues (225 x $39,000)	$8,775,000
Costs
Direct material costs (325,000 x $7.50)	$2,437,500
Manufacturing conversion costs (225 x $8,200)	$1,845,000
Selling and customer service cost (82 x $10,000)	$820,000
Total costs	$5,102,500
Operating income	$3,672,500