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# 00 720000 72000 marketingandother 240000150 360000

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Unformatted text preview: 240,000 \$6.00 \$3.00 1.50 \$4.50 Differential New \$1,440,000 + \$ 91,200* 264,000 \$5.80 \$1,531,200 Revenue Variable costs Manufacturing 240,000 \$3.00 720,000 + 72,000 Marketing and other 240,000 \$1.50 360,000 + 36,000 Variable costs 1,080,000 + 108,000 Contribution margin 360,000 – 16,800 Fixed costs Manufacturing \$0.50 20,000 12 mos. = 120,000 –– Marketing and other \$0.90 240,000 216,000 –– Fixed costs 336,000 — Operating income \$ 24,000 – \$ 16,800 *Incremental revenue: \$5.80 24,000 \$139,200 Deduct price reduction \$0.20 240,000 48,000 \$ 91,200 Variable 264,000 \$3.00 792,000 264,000 \$1.50 396,000 1,188,000 343,200 120,000 216,000 336,000 \$ 7,200 4 3. 4. (a) (c) \$3,500 If this order were not landed, fixed manufacturing overhead would be underallocated by \$2,500, \$0.50 per unit 5,000 units. Therefore, taking the order increases operating income by \$1,000 plus \$2,500, or \$3,500. Another way to present the same idea follows: Revenues will increase by (5,000 \$3.50 = \$17,500) + \$1,000 \$18,500 Costs will increase by...
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