Promblem set 1 - LIENBACH ProblemSet1 1. TexasCompany

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LIEN BACH Problem Set 1 1. Texas Company Additional Cost: 2,000*(15+45+25) = 170,000 Additional Revenue: 2,000*120 = 240,000 Profit: 240,000 – 170,000 = 70,000 Conclusion: If the order were accepted, the operating income of Texas Company  would increase 70,000. 2. Georgia Company Sales: 100,000*12.5 = 1,250,000 Variable cost in total: Direct materials = 5 * 100,000 = 500,000 Direct labor =  3 * 100,000 = 300,000 Over head =  1* 100,000 =100,000 Selling and administrative= 0.25 *100,000= 25,000  Fixed Cost: Over head =  80,000 Selling and administrative = 35,000 Total variable and fixed cost of selling and administrative: 25,000+35,000 =  60,000 Total variable and fixed of overhead cost: 100,000 + 80,000 = 190,000 a. Prepare an income statement using the contribution approach
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Sale 1,250,000 Less: Variable expense Direct materials 500,000 Direct labor 300,000 Overhead 100,000 Selling and administrative expense 25,000 Total Variable expenses 925,000 Contribution margin 325,000 Less: Fixed expense
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Promblem set 1 - LIENBACH ProblemSet1 1. TexasCompany

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