Question

The Jordan Company manufacturers only one type of shoe and has two divisions, the Sole Division and the Assembly Division The Sole Division manutactures soles and then them to retaiers The market price tor te Assemby Dwson to puttase a par of scies s$40 Foedcosts are per par 100000 Sole's costs per pair of soes are 58 Drect maberias Direct labor Division od cot 32 Assembly's coots per completed pi of $10 Direct labor Vanabie ovemead Division fodcon

Answer 1

Answer : A. $1000000 more net income under Scenario A.

=>

	Scen A	Scen B
Sales	120	120
Less: Exp.
DM	10	10
DL	2	2
V O/h	2	2
Sole transf Price	30	40
Total Variable cost	44	54
Add:Fixed Exp.	18	18
Total Expenses	62	72
Net Income per unit	58	48
Total Net Income	5800000	4800000
Increase in NI	1000000